Personal loans are unsecured loans under which the bank lends you money based on your credit ratings, and there is no need for collateral for the money lent. Personal loans, on the other hand, have higher interest rates than different types of loans, such as home loans or other loans, due to the amount of risk involved in lending the money. The majority of banks provide personal loans ranging from Rs.50,000 to Rs.15 lakh. The impact of personal loans on ordinary life is vast. There are many regions of life affected by personal loans, a few of which are listed below:
- Weddings: Weddings are important and expensive events in India. Most people want their wedding day to be unforgettable and go to great lengths to make it happen. Banks provide wedding loans to assist you in making your special day memorable. Loans may be obtained by the prospective bride, groom, or any family member. When paying for a dream wedding seems challenging, people turn to marriage loans. Marriage loan interest rates range from 11.25% to 24% per annum. The loan sum may be as much as Rs.25 lakh. Many of India's leading banks check personal loan eligibility and provide marriage loans to eligible applicants.
- Travelling: One need not be disheartened due to the lack of money to go on a vacation. You can fly around the world and pay your bills later with holiday loans, which are designed specifically for vacationers. Holiday loans also provide travel insurance as a bonus, so you're covered on all fronts. Travel loans are simply personal loans availed of to generate funds for traveling. Most lenders in the industry provide travel loans for both domestic and international trips. If you plan to take one soon, you can look through the many options and choose one to finance your exotic dream holiday. A travel loan with a maximum loan sum of Rs 40 lakhs interest rates starting at 10.75% p.a. and repayment terms of up to six years can be availed of.
- Education: How often do we see middle-class parents struggling to fund their child’s education? A variety of lenders provide personal loans that can be used for educational purposes. You can use an education loan to pay for everything from your child's fees to some other academic necessity. Top financial lenders in the country commonly classify student loans as educational loans. Banks and financial institutions provide education loans to those who want to further their education, with the maximum loan sum being Rs.1.5 crore. Education loans have a maximum term of 15 years and are available at competitive interest rates ranging from 8.45% to 15.2% per annum. With the current boom in the education sector, many banks like Oriental Bank personal loan have observed a rise in the number of education loan applicants.
- Old age: Old age can be a challenging time if financial investments are not in place. Pension loans are only available to older people, but the normal eligibility conditions do not apply to these kinds of loans. Some banks provide 7 to 10 times the amount of pension the pensioner received the month before submitting the loan application under this scheme. Regardless of the fact that we are prepared or not, the need for finance can strike at any moment. Personal loans are beneficial in financial emergencies because they are not linked to a particular reason. While personal loans are widely available in the market, pensioners will have a more difficult time obtaining approval. Banks view older people as a higher risk and are less willing to lend to them.
Conclusion:
Personal loans act as a shield for most families. Every household has considered availing a loan sometime or the other and due to various reasons. However, income must be assessed before borrowing. Not being able to pay a loan not only affects the credit score but also adds up to the stress.