Top Reasons Why People Seek For Personal Loan

By Author: Andy Smith
Total Articles: 13
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Personal loans are today, one of the highly sought after loans in India. It is because of the ease of obtaining individual loans from banks. Banks have reduced paper work in case of personal loans. So, if an individual applies for personal loan, then the status of loan application will be communicated within 48 hours, i.e., whether personal loan may be issued or not. If personal loan can be issued then it is disbursed within in one week of time.


This is unlike other types of loans which are issued by banks such as vehicle loans, housing loans and educational loans. For a typical housing loan, the loan disbursement can take place between 1 month to 2 months depending upon property verification and other formalities. It is similar case with vehicle loan. For educational loan, it can take the same time of 1 month to 2 months. So, this is why many people prefer personal loans. Individual loans are issued with no questions asked about the purpose of loan.


When we compare personal loans with other types of loans such ...
... as the above mentioned housing loans, vehicle loans, educational loans, these loans are issued only after submitting collateral security or property pledge to the bank. But in case of personal loans, there is no such thing as collateral submission or pledge of property. This is ideal for those people who do not possess properties that can be pledged as security to obtain a loan.


Another reason which attracts many people toward individual loans is that people with less income can also apply for personal loans. This means that people who earn as low as Rs.10,000 per month can also apply for personal loan. But, in case of other types of loans such as housing loans, vehicle loans, educational loans, they are issued to people with high annual income. People who fall under income groups of at least 3 to 5 lakhs per annum and above can easily obtain these types of loans. But, such loans may not be issued to a low income person.


Today, almost all banks are offering personal loans to their customers. But, which banks provide the best personal loans is a big question. Personal loan rates of interest depend upon banks as some banks charge high rate of interest which can range between 24 to 35 % or above, while some banks charge individual loans rates of interest as low as 14 to 18%. This difference in personal loan rates of interest can burn a hole in the pocket of the loan taker. So, one must compare personal loans interest rates from different banks before applying for a loan. If a conscious effort is made to avoid high personal loan rates of interest, good amount of money can be saved. Today, thanks to internet and various websites providing financial services such as Policy Bazaar.com, it is easy to compare personal loans interest rates before applying in one bank. It is also advisable to maintain a good credit history because, credit history can play major role in personal loan interest rate determination. Good credit history will yield low interest rate and bad credit history will increase the interest rate.