A personal loan refers to lump-sum financing. Banks and NBFCs offers the loans to borrowers to meet a variety of expenses. Some of the common reasons for taking a personal loan are to meet expenses related to holidays, wedding, medical procedures, home renovations, education and personal purchases. Borrowers also use the finance option for debt consolidation and credit card payments.
It is a form of instalment credit, repaid to the bank or NBFC in regular increments over a pre decided period of time, usually ranging between two to seven years. These loans are often considered as an affordable alternative to credit cards as they have lower interest rates than credit cards – interest rates can be as low as 9.99% for high-qualified borrowers.
It is important to remember that the money is a loan and not is never given without considering a borrower’s repayment capacity.