19 December 2023
In the pursuit of turning dreams into reality, financial empowerment often plays a crucial role. Whether it's starting a business, pursuing higher education, or embarking on a personal project, the availability of funds can be a determining factor. One avenue that individuals explore to bridge the financial gap is through personal loans. Let’s delve into the dynamics of personal loans and understand how they work.
Understanding Personal Loans
A personal loan is an unsecured form of credit that individuals can use to fund major expenses for various purposes. Unlike secured loans, such as home or auto loans, personal loans are not backed by collateral which means that the approval is based on factors like creditworthiness, income, and financial history. The credit score of an individual plays a crucial role in determining the rate of interest being charged by the issuing authority. If your credit score is greater than 700, the rate of interest charged by the issuing authority might be less.
Key Features of Personal Loans
Fixed interest rates: Many personal loans come with fixed interest rates, providing predictability in monthly payments. The rates of interest for personal loans range from 10.50% to up to 40%. However, the loan issuing authority decides the final rate of interest being charged based on the creditworthiness of an individual.
Fixed term: Instant personal loans typically come with fixed terms, ranging from one to seven years meaning that the borrowers have a clear timeline for repayment.
Flexible usage: Individuals can use personal loan funds for a variety of purposes, giving them the flexibility to address different financial needs.
A few factors to consider
Assess Your Financial Situation: Before applying, consider your income, existing debts, and credit score. Understanding your financial health helps you determine the loan amount you can afford.
Research Lenders: Compare interest rates, fees, and terms to find the most favorable option from banks/financial institutions. One can rely on online tools and platforms to make this research easier.
Check Your Credit Score: A good credit score improves your chances of securing a favorable loan. A credit score above 700 is considered good and will attract lower interest rates on the personal loan being offered. You can check your credit score for free on the official CIBIL website
Review Loan Offers: Carefully review the terms and conditions while paying attention to interest rates, fees, and repayment terms.
INDIE by IndusInd Bank – Empowering Your Dreams
Instant personal loans can be a powerful tool for empowering your dreams, but they do have a few drawbacks too. Interest rates are higher as compared to secured loans and they potentially impact your credit score if not repaid on time. Additionally, borrowers may face prepayment penalties and fees, contributing to the overall cost of the loan.
INDIE by IndusInd Bank offers a flexible credit line offering you instant funds of up to ₹5 Lakh. The feature allows an individual to withdraw the desired amount of money as and when required. Moreover, the interest rate is charged only on the amount used and not the entire credit limit. Not just this, you can choose a suitable repayment schedule making it absolutely convenient! This financial tool provides a safety net for unexpected expenses or opportunities without the need for a new loan application.
