Besides their collateral-free nature, zero end-use restriction makes personal loans one of the most popular financial products. RBI data showing 13.5% y-o-y growth of personal loans, as of March 2021, testifies this fact.
Such flexible end-usage helps individuals avail different types of personal loan to meet several requirements. Potential borrowers must be aware of these categories beforehand to see if their needs fall under any of them.
What are the different types of personal loans available in India?
Following is a list of different types of personal loans one can opt for:
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Medical loan:
Medical emergencies occur without any warning. Plus, given the rising costs of medications, hospitalization, and treatments, individuals may need external funding for financial compensation. A personal loan is a viable option to fund such expenses efficiently.
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Second-hand car loan:
Individuals can apply for personal finance to purchase a used car without any hassle.
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Short-term personal loan:
This refers to a small personal loan that individuals can avail of to meet short-term fund requirements. Several digital lenders offer this financial product against minimal or no formalities. Borrowers usually receive this amount in their account within a few hours and can repay within a few days or months.
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Wedding loan:
Indian weddings usually involve a lot of pomp and show, generally lasting for days. These involve several costs, including catering, decoration, wedding costumes, jewelry, and guest lodging. Individuals unwilling to drain their life’s savings to finance these costs can instead utilize a personal loan for the same.
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Education loan:
Higher education can probably be the most common cause of availing of personal loans, as higher education can burn a hole in one’s pocket, primarily if pursued overseas. Generally, parents opt for external funds to fund their offspring’s tuition fees, stationery, travel expenses, and accommodation charges, among other costs. Working individuals can also opt for such funds to pursue specific courses and repay this amount by themselves over time.
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Travel loan:
Also known as vacation or holiday loans, these funds can help individuals satiate their wanderlust without worrying about draining their finances. Whether on a family holiday or a solo trip, individuals can use these funds to pay travel and hotel bills efficiently. Individuals wondering how to manage these expenses can also refer to these 6 international summer vacations under Rs.5 lakh.
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Festival loan:
This is a type of loan that several lenders offer during specific festive seasons, such as Christmas, Dussehra, etc. Individuals can opt for such funds to prepare for these festivities and meet the costs of purchasing gifts, new outfits, and lavish feasts.
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Home remodeling loan:
What closely follows a house purchase is its renovation. While many actively avail financial products to buy a house, individuals rarely consider a loan to refurbish their living space without compromising. One can utilize such funds to cover expenses of new furniture, repairs, labor costs, among other charges. Refurbishing one’s house also helps elevate its worth in the real estate market. Individuals should also consider certain tips to save money when renovating their homes in this context. Saving on such expenses will help them avail a lower loan amount, thus reducing the final interest rate on personal loan outgo.
Once you decide on the personal loan category you need, it is essential to understand its application process.
How to apply for a personal loan?
Here is a step-by-step process on how to get a personal loan:
Step 1: Go to your chosen lender’s official website and navigate to the online application form for a personal loan.
Step 2: Fill in this form with personal, employment, and financial details. Then enter your necessary loan amount and preferable tenor.
Step 3: Next, upload scanned copies of all necessary documents. These primarily include KYC documents, salary slips, bank account statements, and employee ID cards or certificates. After that, submit your application.
A loan representative will contact you to complete additional formalities before approving and disbursing the required funds upon completing the above process. Here, individuals can check their pre-approved loan offers, if any, to avail a speedy disbursal.
Additionally, notwithstanding the types of personal loans, individuals must be aware of the eligibility and documentation requirements beforehand to ensure approval.
