Types of Personal Loans and Creditworthiness

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Personal loans are a suitable financing method to meet any accused capital necessity.

They layout single-time cash payments to the customers. The loan is then repaid by the customers as monthly installments. The amount of installments depends on the rate of interest and the term of the loan.

Madhusudan Ekambaram, Co-Founder and CEO, KreditBee and Co-Founder, FACE, says, “The prominence of personal loans is on the rise as they are safe and available at low-interest rates.”

The increase in the interest for a personal loan may be a result of the incorporation of technology into banking facilities. Technology and Digital platforms have helped people to avail services instantaneously.

Since the opportunities and interest is increasing with time, it is important to make wise choices.

The various types of personal loans include a Home renovation loan, Education loan, Wedding loan, and Medical loan.

Home Renovation Loan: To meet the financial requirements related to the repair and maintenance of the house, a home renovation loan can be used. This is a popular loan and is frequently funded.

Education Loan: Higher education is costly these days and education loan is a blessing. Certain schemes provide EMI repayment flexibility. This is easily available for professional courses.

Wedding Loan: In India weddings are lavish celebrations. It is a costly affair that can break the financial stability of a family. Wedding loans can help by covering related expenses.

Medical Loan: Medical emergencies are common nowadays. When it comes to serious ailments, the treatment can be highly expensive. Depending upon the length of hospitalization, the expense increases. A health insurance policy is the prime choice in case of medical emergencies.

However, the expenses can be more than what the policy offers. In that case, medical loans are an aid.

To meet unexpected necessities, personal loans are good options. These days, fintech firms provide a quick influx of cash.

Remember that the availability of a loan also depends on the creditworthiness of the buyer. The lenders check the credit history of the customer. They study the credit report of the buyers and conclude their repayment capacity.

So, either alleviate the existing debts or close them before applying for higher amounts. If you do not meet the eligibility requirements even after this, you can look for a co-borrower. The person acting as the co-borrower should be eligible.

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