There’s no doubt that personal loans are growing at an unprecedented rate in India. According to the RBI, this form of credit has growth at a rate four times higher than overall bank credit. At the beginning of FY19, the total amount of personal loans in India was a staggering Rs. 5, 76,000 Crore, which is almost double of India’s total FDI.
There are a number of reasons behind the massive popularity of personal loans.
Easily accessible: There are numerous financial institutions that extend personal loans easily and quickly. You may even apply for a personal loan online these days.
Unsecured credit: Personal loans are unsecured, implying that you do not have to mortgage any of your assets to avail the loan amount.
Minimum documentation: Renowned financial institutions require just the basic documents like KYC documents and proof of income to sanction personal loans.
Easy eligibility: Qualifying for a personal loan is subject to the applicant meeting a few basic eligibility criteria. Although these vary between financial organisations, the general criteria include a certain age limit, Indian residency and proof of employment.
No end-usage restrictions: You can utilise the funds from a personal loan at your discretion. There are no end use restriction from the lender’s part, making it one of the most versatile loans available.
Attractive interest rates: Personal loan interest rates are quite competitive. It doesn’t put much of a financial burden on the borrower while repaying the loan amount.
Quick disbursal: Most financial institutions approve personal loans in a matter of minutes provided all the documents are submitted as per requirements. The loan amount is typically disbursed within 24 hours of approval.
Flexible tenor: Generally, personal loans are available with tenors ranging between 12 and 60 months. You may choose the most suitable loan tenor based on your repayment capability.
These are some of the reasons that personal loans are growing fast in India and show no signs of slowing down in the foreseeable future.