There are always times when we suddenly require money but don’t have enough at the moment. What can be done in such a situation? Some examples of these situations are medical emergencies, weddings, vacations, buying a car, higher education and even home renovation. Believe it or not, all the mentioned situations can be handled with the help of personal loans.
The amount that you receive and the rate of interest that gets applied on the loan are decided according to the eligibility- your age, earning capacity (and hence the repayment capability) and your credit score. The minimum monthly income requirement of some banks is INR 15,000, while others have it slightly higher at INR 25,000. There also options available for lower income groups. Some of them are explained below in brief. If you want additional information, you can click know more.
- You Can Get a Loan Against a Fixed Deposit
If you have a fixed deposit and do not wish to break it for your emergency, you can take a loan against it. The banks use it as collateral and give you a loan of up to 80% of the FD amount. The interest rate for the loan is 1-2% more than what you get on your fixed deposit, which is mostly lower than a regular personal loan and it is free of penalty in case of a prepayment.
- Loan Against Gold
If you have any gold, you can get it evaluated and get a loan of 70-80% of its value. Your income doesn’t matter while taking a gold loan. The rate of interest for this type of loan is generally 10-14%. There is a processing fee also involved if you go with this method, which could be 1-2% of the original loan amount. The tenure of the loan can be decided by the loan applicant.
- Loans from Financing Companies Other than Banks – NBFCs
The rules for lending are more flexible for these companies. They do not always consider minimum income as a criterion and see every case as different. Regular borrowers are given preference as they are trusted and there is less risk of default. When taking a loan from an NBFC, collateral has to be presented and the interest could be charged at as high as 13-20% or even more depending on the merchant you choose.
- Fintech Loans
New-age financing companies which specialise in making use of technology for lending and providing investment portfolios are slowly changing the way people take loans. They offer smaller personal loans, this is where banks and NBFCs lag behind and are not able to serve their low-earning customers. Companies like MoneyTap give you small loans and charge you interest only on the money that you actually use. People with low credit scores and salaries can take advantage of this for their loan needs.
A personal loan by definition itself is a loan for personal use. You can choose when, where and how you want to use the loan, the only condition is that you should return it in the allocated time with interest that has been agreed upon. All in all, loans can be of great help in times of financial peril and must be considered.