Personal loans have emerged as sought-after options people are using for meeting both their short-term and long-term financial needs. Banks and non-banking financial companies offer these loans to retired pensioners, self-employed professionals, and salaried employees. Read on to find more about personal loans and how to secure them successfully.

What is a Personal Loan?

• These are unsecured small loans, which individuals take from banking and non-banking institutions for fulfilling their personal needs.
• The criteria for approval of these loans include your repayment capacity, income level, and credit and employment history.
• The personal loan is unsecured, as it is not secured against any asset like a car or a home loan.
• Due to the greater perceived risk when sanctioning these loans, the interest rates on personal loans are higher than home, car, or gold loans.
• It can be used for a plethora of financial needs ranging from meeting unexpected medical expenses, child’s education, and buying latest gadgets to fixing your car, investing in a business, and for down payment of a new home.

What are the Things You Must Know Before Applying for a Personal Loan?
The following are the things you should know before you apply for a personal bank loan:

• Interest Rate
  The reason behind a higher interest rate is the unsecured nature of personal loans in contrast to the secured nature of home loans and more.
• Credit Score
  As there is no other security involved in taking personal loans, your credit score plays an important role. The interest rate can increase in response to your average or poor credit score.
• Not a Long-term Solution
  Personal loan terms are limited to seven years or less, which means it is not an ideal solution if you wish borrowing a lot of money. If you do borrow a big amount, then you would have to pay it back in big installments.
• Banks Aren’t the Only Options
  You can also get a personal loan from a credit union offering a lower rate of interest and fees.

When in need of an urgent financial need, a personal loan can be a true lifesaver. You can get funds from this loan within two weeks of applying online.

What are the Eligibility Criteria to Obtain a Personal Loan?
There is no mortgage required but you certainly require meeting these following criteria for getting personal loans:

• A steady and stable income to repay the loan
• Applicant should be aged between 21 to 60 years of age
• A good credit history

How can you secure a personal loan successfully?

• Know Your Purpose
  Do have a clear picture of the purpose of your personal loan beforehand, as it can help you decide whether the loan is worth taking.
• Eligibility
  Make sure you fulfill eligibility criteria appropriately.
• Credit Appraisal
  Ensure you have a reasonable credit score for the loan to get approved.
• Duration
  It depends on your repayment capacity and the loan amount.
• Interest Rate
  Maintain a good credit score as a bad one can result in an increase in the interest rate offered.

How can you Find the Best Personal Loan Rates?
These tips can help you secure the best interest rates on personal loans:

• Look for top loan providers
• Improve your credit score
• Get multiple personal loan rate offers
• Compare
• Choose a shorter term
• Consider total loan costs and payments
• Opt for variable rates
• Consider a secured personal plan