1. What is a personal loan?
A personal loan can be obtained for any purpose be it for a cruise holiday or a wedding expense.
It is handy when you have an urgent need for money in a lump sum.
It is very useful when you can repay the money to the bank in the shortest time span possible as the interest rates are quite high compared to other loans. You can take a personal loan for up to 5 years. The loan does not require elaborate paperwork. The amount of loan one is eligible for is dependent on the individual's income.
2. How is a personal loan different from a loan against property, shares or gold?
LAP - Loans against Property, loans against shares or gold are a more sensible option in comparison to an unsecured personal loan if one needs to pay back the bank over a longer time frame. The loan amount one is eligible for is dependent on the value of the property and the interest rates are much lower.
It gives the loan taker ample time to repay the loan but the catch is failure to do so will result in the property being auctioned to secure repayment by the bank/financial institution.
On the other hand, the advantage of a personal loan is that it requires minimum documentation and is quicker to process.
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