Why personal loans in India are important!

Indian economy is facing a major change in the coming years; the cost of living has increased along with the increase in inflation rates. Even the spending habits of people have changed throughout the years. People are now no longer content with just living a normal life- they want to eat good food, wear great clothes and go out to places that they haven’t seen before. However, in order to do and accomplish these goals, people need to have access to cash. But many-a-time, people often face a cash shortage. At such times, people have the option to either borrow money from family and friends or to opt for a loan. There are numerous banks and NBFCs (non-banking financial companies) that offer personal loan in India. However, the interest rates offered by new-age financial institutions are way lower than the ones charged by traditional financiers and loan sharks.

The reason why personal loans are so great in the first place is that they are unsecured. The fact that they are unsecured in nature means that you don’t have to provide any sort of collateral in exchange for the loan amount. Also, there are no restrictions on the spending of the money; meaning, you can purchase a new gadget or even take care of the last-minute trip with the loan amount. However, the fact that there are a lot of institutions offering these loans often bewilders the common-man. Thus, we have made a compiled a questionnaire of the most asked questions to help you decide the one for you, and they are here as follows:

Why are interest rates important?

The first thing that you must look before obtaining or applying for a loan is the interest rates that will be charged by the lender. After all, the repayment of these loans is done in the EMI form and these installments are calculated on the basis of the principal amount borrowed by you, interest rates charged by the lender and the tenure that you have chosen.

How can I calculate personal loan interest rates?

There are two ways through which you can calculate the interest rates for your personal loans. The first and the traditional method would be for you to visit a financial institution in person and spend countless hours to get a quote, or the second would for you to make use of the online services. We would recommend the latter; the EMI calculators are available on the financial institution’s online websites and also on the aggregator sites. You can simply insert the asked details and get an online quote within a few minutes.

What are the eligibility criteria for a personal loan?

The personal loans are only given to the candidates that are deemed worthy by the financial institutions. This loan worthiness depends upon a number of factors such as:

• Income: The first thing that the financial institutions check is your income source. The reason being; a personal loan is unsecured in nature and thus, the banks and NBFCs (non-banking financial companies) want to ensure that you will be able to repay the loan amount.
• Credit score and history: Make sure that you have and are still making timely repayments on all of your previous and current loans. This is because; your repayments have an impact on your credit score and history and the financial institutions check them before sanctioning your loan.

Documents: Make sure that you compile and present all the required documents for the loan sanctioning.

An personal loan would be the first financial help for your family in your absence.