Personal loans are offered by different financial institutions like PSUs, private banks, and digital lenders like Cashbean and Navi. They are unsecured loans, offered to you based on your credibility. And it has zero collateral requirement and zero restriction on end usage of the funds. However, the personal loan rates are higher than other credit options like education loan, home loan or loan against property. This is because the credit risk involved in other credit options is lower than personal loan. Most financial institutions offer personal loans that may range anywhere between Rs 50,000 and Rs 40 lakh.
What are the different personal loan types?
Personal loans are credit options that need no guarantee or security. Thus, the insurers offer such loans based on your monthly income. Discussed here are the different personal loan types –
Weddings are extremely expensive affairs and individuals often avail personal loans to manage their wedding expenses. This kind of personal loan aims to prevent you from draining away your long-term savings and investments and rather repay the loan via instalments that stretch over the longer time periods of 1 to 3 years. Also, when you are out of money to fund the wedding cost, you may avail this loan to conduct the important ceremonies and functions.
Higher education loan
This kind of personal loan allows you to finance your child or any of your family member’s higher education. Also, you can pursue your part time course while doing your business, job or self-employment and take the loan simultaneously. For the application submission, you must provide your salary slips, bank documents, monthly income proofs etc. Likewise, there are employees who avail a sabbatical to pursue few courses.
Home renovation loan
While banking and financial institutions offer home loans for building or purchase of a new home, very few banks provide home loans for remodeling and renovation. In case you are unable to avail home loan for renovation, you can request for a personal home renovation loan.
In the times of massive medical expenditures, which insurance fails to cover, you can avail medical credit by availing personal loan. For availing it, you will be required to mention the reason for availing the personal loan. Also, you will be required to show the relevant documents for approval of a medical loan.
COVID 19 personal loan
Ever since COVID 19 pandemic has hit, many have witnessed serious financial woes while getting hospitalized for COVID 19 treatment, if infected. However, many of the lenders offer personal credit as an extension for medical loans for COVID treatment. Thus, you must avail this loan only if you or any one in your family is infected with COVID to treat this disease at the earliest.
When you want to finance a vacation plan without hampering your investments and savings then you can avail a travel loan. To avail this credit option, you are required to provide your travel documents. For example, accommodation details, tickets, VISA, passport etc.
Debt consolidation personal loan
A lot of loans and outstanding credit card dues might become cumbersome for you to service it on time. As an outcome, you may struggle to pay or remember the payment dates for every credit. In such cases, there are extremely high chances of you to miss out on your payments, which further piles up your debt amount on your existing credit option. Additionally, you might run out of the monthly savings too if you make a lot of payments at several platforms. Thus, all debts can be easily paid off using debt consolidation loans. So, ensure to avail personal loan to consolidate all your debts into one. This does not lower your cost but also allows you to remember your due date.
Small personal loan
When you avail a small loan for personal loan and not for meeting your medical expense or higher education cost, this personal loan type is known as small personal loan. In such cases, the loan proceeds can be used for multiple purposes.
Beside these, there are lenders who provide special kinds of personal loans to special categories like teachers, government employees, or women. Personal loans might differ massively in terms of rates based on the repayment tenure and loan proceeds you avail. Interest rate and loan amount granted to you further depends upon your monthly income and occupation. It might differ for self employed individuals and salaried.
While all these personal loan types can be availed in the same way by providing your income and identity proofs, you might require stating the purpose of why you must seek the personal loan. Few additional documents required might depend on reasons you stated while requesting for the personal. Also, the verification process for documents for self-employed and salaried might vary slightly.
Personal loan types – FAQs (frequently asked questions)
What are the different kinds of personal loans available?
Following are the different kinds of personal loan you may avail –
∙ Vacation loan
∙ Wedding loan
∙ Festival loan
∙ Consumer durable loan
∙ Home renovation loan
∙ Top up loan
∙ Pension loan
∙ Agricultural loan
∙ Bridge loan
You can avail any of these loans through financial institutions like banks or NBFCs. You may also approach Navi or Cashbean, online digital platforms for the loan.
What is meant by a wedding loan?
Wedding loan is offered when you do not have the finance required to mitigate the expenditures of your marriage. The Rate of interest on such loans is higher during the wedding season.
What is meant by vacation loan?
A travel or vacation loan can be availed when you want to fund your upcoming holiday trip. Loan quantum depends on your credit score and income level.
What is meant by festival loan?
A festival loan is availed to cover the expenditures involved in celebrating the festival. Generally, banks keep the borrowing limit from Rs 50,000 for such loans.
What is meant by home renovation loan?
This loan type assists you with the fund you require to conduct home renovation. Personal home renovation loans can assist to enhance your home’s value on the real estate market.