As per the data released by RBI, the credit for personal loans rose from Rs 26 lakh crore in September 2020 to Rs 29.18 lakh crore in September 2022. This marks an increase of 12.1%. Only 6.7 per cent more bank credit was issued overall throughout that time.
One can take a personal loan to cover personal expenses and repay the money over time. A personal loan could be used, for instance, to pay for moving costs.
Borrowers are now willing to take credit amounts on themselves via personal loans, which they repay through flexible EMIs. Flexible EMIs can be paid within both long- and short-term repayment tenures. While taking out personal loans, interest rates become a deciding factor. Interest rates determine whether the borrower can quickly repay the total repayment amount. The higher the interest rate, the greater the interest with capital which needs to be repaid.
Personal Loan Options in India
If you are one of those wondering where to begin their loan journey, fret not. There are different types of personal loans that you can choose based on your monetary needs, present financial standing, and, most importantly, competitive personal loan interest rates.
#1 – Wedding Loans
The name itself is self-evident. People usually plan weddings in advance to determine a budget that meets all their needs. Despite all possible plans and budgeting, the chances of unexpected or recurrent expenses can crop up right around the time of the wedding. In such a scenario, without a steady source of cash already at your disposal, one prefers to go for a personal loan.
Indian weddings are cost-intensive affairs. In such scenarios, wedding loans are curated with the aim of quick sanctioning. The amount in such loans is quickly transferred to the borrower’s checking account with the usual 30-day gap before the beginning of the repayment tenure.
- Compared to credit cards, these personal loans often have cheaper interest rates.
- Long-term financing is made possible by the payback conditions of wedding loans
- Access to money is quick
- It’s flexible, and the borrower can pick how to spend the money
#2- Travel Loans
Are you planning that dream vacation of yours? Whether it is the dream vacation or that religious trip your mother has been wanting for some years, travel loans offer quick sanctioning of cash just in time to fund your extravagant travel plans.
Now let us look at some of the critical points of this convenient and lucrative personal loan type.
- Fast funding allows the sanctioning of the loan just in time for the travel.
- It is collateral-free, so you don’t lose your collateral in case of loan default.
- Travel loans are more affordable than credit card transactions. A lower APR than those on a credit card might be available to the borrower, which could result in financial savings.
#3 – Home Renovation Loan
Home renovation loans are one of the most popular personal loans. They are borrowed to remodel or reorganise the home structure, including interior designing. Borrowers often complete long-due renovation work based on receiving this personal loan.
- You can borrow money with a renovation loan based on the estimated value of your refurbished home.
- It makes it possible to restore older homes.
- The interest rate will typically be lower, and the borrower will generally have more time to repay because they are just taking out a loan for the house and refurbishment.
The borrower can take out a personal loan for home renovation, depending on the extent to which they wish to renovate.
#4- Pension Loans
Standard eligibility requirements do not apply to pension loan as it is only available to retired individuals. Some lenders offer 7 to 10 times the pension the retiree received in the month before submitting the loan application.
- In many cases, pension or pension-backed loans have low annual percentage rates, which is a huge advantage.
While loans against pensions are generally not advised, in case of urgent medical or other requirements of personal nature, pension loans can help non-working, retired people to gain a lump-sum amount at a short interval.
#5 – Education Loans
Many financial institutions provide personal loans that can be utilised for educational purposes. Such loans help deserving students complete their educational goals without fearing it becoming a financial burden to the family. You can use the education loan to cover costs ranging from your child’s tuition to other academic needs.
- Assists in addressing students’ increasing financial needs concerning a certain higher study degree.
- Due to the flexible terms and circumstances, the loan amount can be repaid easily.
Personal loans taken out for the purpose of education, when viewed from the aspect of long-term benefits, are good investments. Not only do they make the life of a meritorious student, but they also help make that student successful in life.
Among the most preferred financial institutions is Clix Capital, which offers instant personal loans through online applications with minimum documentation and quicker approvals.
Neel Achary is the editor of Business News This Week. He has been covering all the business stories, economy, and corporate stories.