An unsecured personal loan can be your savior when you require extra cash for just about anything. With the advent of personal loan apps, it has become easier to apply for personal loans. Many lenders also provide an inbuilt personal loan EMI calculator in their apps to help loan borrowers get an estimate of their EMIs. However, what is an unsecured personal loan? An unsecured personal loan is a loan that requires no collateral and can be availed for any purpose. One can now get hassle-free unsecured personal loans from many banks and NBFCs.
That being said, for lenders to provide you with an unsecured personal loan without any collateral, they need to know your creditworthiness. Therefore, before you start applying for a personal loan, there are few things that you need to know.
How to Qualify for an Unsecured Personal Loan?
When you apply for an unsecured personal loan, the lender would want to be confident about your repayment capacity. These lenders measure your repayment capacity based on various factors. They are as follows:
- Credit Score
Your credit score or as it is also known as CIBIL score is a summary of your credit history. This score is an indicator of your timely payment of past debts. This score helps the lenders to predict how likely it is for you to repay the loan. A good credit score can also help you secure a low personal loan interest rates and a higher loan amount.
- Monthly Income
Lenders need to know your how much you earn monthly or annually to gauge whether or not you can repay the loan.
- Debt-to-Income Ratio
The Debt-to-income ratio is a percentage of all your monthly debt payments divided by the gross monthly income. This is also one of the criteria that lenders measure to understand your repaying ability. Here, the gross monthly income is the one without any taxes deduction or any other type of deductions. The higher the ratio, the lesser chances of getting an unsecured loan and vice versa.
Who are the different types of lenders that offer unsecured loans?
Below mentioned are the types of lenders that offer unsecured personal loans.
- Traditional banks
- Credit Unions
- Non-Banking Financial Institutions
- Peer-to-Peer Lenders
From the above five, you need to choose a lender who can offer you the best personal loan basis your needs such as how instantly you need the finances or any other requirement. Some of these might also offer secured personal loans if they are unable to determine your creditworthiness.
Rates & Charges
- Interest Rates
Unsecured loan interest rates are something that you should know before you apply for the loan. As there is no collateral involved, the rate of interest can be higher. The rate of interest also depends on your creditworthiness.
- Processing or Origination Fees
Some lenders might also charge a fee for processing the loan application. This fee is often 1% to 6% of the loan amount.
- Offers & Benefits
Many NBFCs and banks have offers which they run on festive periods, which you can consider to avail a personal loan with cheaper EMIs. Many lenders also let you earn rewards while you get in an engagement with them, which ultimately help you reduce your EMI cost. These are some added benefits which you can consider while applying for you unsecured personal loan.
Further, Indiabulls Dhani provide instant personal loans, at interest rates starting at as low as 1.17% p.m. Their entire process is completely online, and you get instant approval and disbursal of your unsecured personal loan. Indiabulls Dhani is a leading personal loan companies in India to help you manage your personal finances with loans and other services like reward points, instant credit line and more! Add Dhani here AND MENTION MORE ON THE REWARDS WALA loan
To conclude, we can say that unsecured personal loan can be a go-to option if one needs urgent money. If you plan to take a personal loan any time in the near future, you should pay special attention to the factors mentioned above.