Unsecured loans are a credit type for which financial institutions do not demand any collateral as security. Therefore, individuals who do not possess high-value assets and require urgent monetary assistance can apply for unsecured loans and secure a substantial amount.
Individuals who adhere to the specified eligibility parameters can avail of this credit instrument without hassle. Since these loans involve more risk from a lender’s perspective, they involve stringent qualifying parameters. Once individuals understand what is unsecured loan, they can read along to know the other aspects of this credit.
An Overview Of Unsecured Loans – Types, Features, Eligibility And Application
Various lenders offer unsecured loans of different types, including personal loans, commercial loans, business loans, etc. Therefore, now that borrowers know what is unsecured loan, they must check out the prominent features associated with this credit facility.
- No end-use restriction
As already mentioned, unsecured loans typically feature no-end use restrictions. This means borrowers have the liberty to use these funds to finance an array of financial needs.
For example, individuals can use a personal loan to pay off their medical debt, while some can use the funds to finance a child’s higher education, meet wedding expenses etc.
- Flexible repayment tenor
Another prominent feature of a personal loan and other unsecured loans is their repayment tenor, which individuals can choose based on their financial standing. Usually, leading financiers extend flexible tenors of up to 60 months, allowing borrowers to repay the amount easily.
One must note that if borrowers choose a shorter tenor, the EMIs will be higher, and the interest component will be affordable, while opting for an extended tenor will ensure affordable EMIs, but one needs to service the interest component for a longer period. Therefore, individuals must carefully assess their repayment capacity and choose the right personal loan tenure that works for them.
- Competitive interest rates and charges
Interest rates and associated charges play a crucial role in determining the overall borrowing cost. Based on the loan amount one applies for, even a slight change in interest rates can impact the overall outstanding amount and eventually one’s repayment throughout the tenor.
However, individuals with a high credit score and good repayment history can negotiate for better interest rates with the lender. Therefore, one must thoroughly research and compare various rates offered by lenders in the market along with the associated charges and choose the most suitable one.
- Quick disbursal
One of the highlighting features of unsecured loans is their disbursal process. After approval of a loan application, the amount is disbursed within 1-2 working days. Moreover, the ease of application is further improved by the inclusion of pre-approved loan offers extended by reputed lenders. These offers are available on multiple financial products such as business loans, personal loans, credit cards etc. Prospective borrowers can check their pre-approved offers by mentioning their names and contact information.
Eligibility Parameters Of Unsecured Loans
As already stated above, unsecured loans are a risk-free alternative as they do not have to submit any collateral or high-value possessions to obtain credit. Hence, the emphasis on meeting personal loan eligibility parameters is higher.
Following are the personal loan eligibility criteria that one can take as a reference –
- Applicants should be within the age bracket of 21-67 years
- CIBIL score must be 750 or higher
- It is available for both salaried and self-employed individuals
- An applicant’s monthly income depends on their city of residence
Furthermore, individuals need to know about important documents required while applying for a personal loan. By meeting the above-mentioned parameters and submitting the necessary documents, individuals can secure the preferred loan amounts without any hassle.
Application Procedure Of Unsecured Loans
To know how to apply for a personal loan or any other unsecured loan, individuals can follow the steps mentioned below:
Step 1- At first visit the official website of your preferred lender and click on ‘apply online’, and seek an online application form
Step 2- Input necessary personal and professional details in the form
Step 3- Select the loan amount that you wish to borrow
Step 4- Following the initial approval, upload necessary documents
After the final approval, a lender’s representative will connect with applicants for further proceedings.
Now when borrowers know what is unsecured loan and its different aspects, individuals can apply at their convenience. However, one should read all the terms and conditions before signing a loan agreement, as they will present one of the easy ways to manage debt.
