A personal loan is that money that is borrowed from a bank, credit union or online lender and is paid back in fixed monthly payments, or installments. It is the loan provided on the basis of key criteria such as income level, credit and employment history, repayment capacity, etc.
Unsecured personal loans : this loan isn’t backed by collateral, such as your home or car, making them riskier for lenders. Approval and the rate you receive on an unsecured personal loan are mainly based on your credit score.
Secured personal loans : These loans are backed by collateral, which can be seized by the lender if you default on the loan. Rates are typically lower than unsecured loans.
Fixed-rate loans- your rate and monthly payments stay the same for the life of the loan. Having a fixed rate makes it easier to budget, as you don’t have to worry about your payments changing
Variable-rate loans : Interest rates on variable-rate loans are tied to a benchmark rate set by banks. A variable-rate loan can make sense if your loan carries a short repayment term, as rates may rise but are unlikely to surge in the short-term.
Debt consolidation loans : This type of personal loan rolls multiple debts into a single new loan. Consolidating also simplifies your debt payments by combining all debts into one fixed, monthly payment.
Co-sign loans : This loan is for borrowers with thin or no credit histories who may not qualify for a loan on their own. A co-signer promises to repay the loan if the borrower doesn’t, and acts as a form of insurance for the lender.
A personal line of credit- A personal line of credit works best when you need to borrow for ongoing expenses or emergencies, rather than a one-time expense.
The general criteria include your age, occupation, income, capacity to repay the loan and place of residence. To avail of a personal loan, one must have a regular income source, whether you are a salaried individual, a self-employed business person or a professional. An individual's eligibility is also affected by the company he is employed with, his credit history, etc.
Certified copies of degree/license (in case of self-employed individuals)
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