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What Should You Know Before You Apply For a Personal Loan?

· personal loan

We often need money to finance our dreams or to fund several other purposes such as the renovation of your home, a vacation trip, a medical emergency, and anything else. A Personal Loan is the best way that helps you to manage these needs and demands easily.

You can use credit cards to manage these requirements, but that can burn your pocket. Taking a Personal Loan is a better option than credit cards.

Before you apply for a Personal Loan, you must be aware of the different types of loans:

Secured Loans- When you apply for a loan for purchasing an asset like scooter or fridge, then this asset becomes the collateral. You need to keep this asset as collateral with the lender, to get a secured loan.

Unsecured Loans- When you do not need to keep any collateral or asset with the lender and you get the loan to finance your dreams at a higher rate of interest, it is an unsecured loan.

Variable Loans- The rate of interest is not fixed; it keeps on fluctuating depending on the lender’s terms and conditions. So, you may have to pay more interest in total.

Fixed Loans- The rate of interest remains same and fixed and you can estimate your interest payment at the beginning of the loan.

If you want to apply for a Personal Loan, you do not need to keep any collateral, you just need to fulfil the eligibility criteria. It varies among different financial institutions, but there are some basic Loan eligibility criteria which you need to fulfil, which includes your age, employment status, monthly income, credit score, etc. You also need to submit some documents along with the loan application form. These are identity proof, address proof, bank statement, salary slips, and photographs.

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