Post RBI’s mandate to disburse loan within a month post application completion and no collateral required, Personal loans have become an attractive option. Considering that life is uncertain in a way, sudden expenses can crop up for which one might not be prepared. For them, personal loan is a boon. But opting for it without studying its terms and conditions can turn out to be an imprudent step.
For those who are unfamiliar with this type of loan, Personal loans are also called ‘clean’ or ‘unsecured’ loans as they can be obtained without any tangible security like property, fixed deposits or bonds. Only the personal sureties are required to be furnished to confirm that you are a dependable person and will not default on the loan.
Now to avail this service, one ought to be eligible for the same. Taking cues from personal loans of IndusInd bank, there are two variants of eligibility, depending if you’re salaried or self-employed. For salaried employees, your minimum age should be 21, must earn north of 25,000 INR per month and have completed 1 year in current organization and residence. For self-employed, one should be earning more than 4.8 LPA and be 25 years old with 4 years of work experience.
One may “value” the convenience it offers, given banks like IndusInd charge a mean rate of 14.25% on these loans. Firstly, one may appreciate the speed of disbursement, with IndusInd taking 4-7 days to credit the loan. Secondly, since no collateral is involved, it is advantageous for the loan seeker, as he/she need not be under any obligation to his colleagues or friends for providing personal surety. Thirdly, the consumer need not take pains to explain the genuineness of the purpose and submit proof for such purpose.
Now, in order to max out on the loan, one does need to clear the eligibility criteria and have a good credit score (In India, it is measured by CIBIL, Credit Information Bureau of India Limited). Needless to day, one needs to have a good credit score. What’s the criteria one is evaluated on? Past defaults, Loan guarantor, loan history, existing loans, tax records, to name a few, apart from bank’s own repository of information.
Personal loans are a boon to those who have monetary emergencies and don’t want to commit assets as a collateral. With booming economy driving the income expenditure cycle, Personal loans are a useful asset to many citizens of this world.

Posted by The Indian Economist