An instant* personal loan is a versatile financial product offered by financial institutions, with approvals determined by a variety of factors such as credit score, income level, and employment history.
As an unsecured loan, it does not require any collateral, making it an attractive option for many borrowers. Moreover, the processing time is typically fast, especially when applying online, adding to its convenience.
Personal loans can cater to a wide array of financial needs, whether it’s a medical emergency or a planned project like home renovation, which has contributed to their growing popularity.
In this article, we’ll cover 5 important features of personal loans that you should be aware of. Additionally, we’ll discuss important factors to consider before applying, helping you make an informed decision.
5 Key Features of a Personal Loan
1. Substantial Loan Amounts
One of the most attractive features of these loans is the opportunity to borrow significant amounts, depending on your eligibility, repayment capacity, and the lender’s policies.
Leading financial institutions, such as SMFG India Credit, offer personal loans of up to INR 30 lakhs*. Access to substantial amounts can help borrowers cover a variety of significant expenses, such as funding a child’s higher education, wedding, or home renovation, without having to deplete savings or liquidate investments.
2. Swift Loan Processing
Quick processing and approval is another feature that makes personal loans an ideal solution for situations that demand urgent access to funds. Once approved, the loan amount is typically disbursed within a matter of a few days, or even hours, depending on the applicant’s eligibility, the accuracy and completeness of the submitted documents, and the lender’s internal policies.
Note that traditional offline or in-person applications may take longer to process due to the additional time required for manual verification.
3. No Collateral Requirements
The unsecured nature of personal loans makes them especially attractive to individuals who do not own significant assets or prefer not to pledge them when borrowing. Borrowers get the financial flexibility they need without the risk of losing valuable possessions (such as a house or a car) in case of repayment difficulties.
Moreover, the absence of collateral speeds up loan processing, as there’s no need for time-consuming asset verification.
4. No Heavy Paperwork
Personal loans are known for their simple and straightforward application process, requiring minimal paperwork. Many lenders offer the convenience of online submissions, where borrowers can upload essential documents such as identity and address proofs (e.g., Aadhaar card, passport) and income proofs (e.g., salary slips for the last 2–3 months, Form 16).
This digital-first approach eliminates the need for in-person visits, making it easier for borrowers to gather the required documents and apply without hassle.
5. Flexible Repayment Tenures
Personal loans offer flexible repayment tenures, allowing borrowers to choose a duration that best suits their financial situation. This makes it easier to manage monthly EMIs (Equated Monthly Instalments), alongside other regular expenses, ensuring minimal strain on one’s budget.
Some borrowers may opt for a shorter tenure with slightly higher EMIs to save on overall interest costs and repay the loan more quickly. On the other hand, those looking to reduce their monthly financial burden may choose a longer tenure, which, while lowering the EMI amount, could lead to higher overall interest costs.
Although specific repayment tenures vary across lenders, most financial institutions typically offer options ranging from 12 to 60 months.
Factors to Consider Before Applying for a Personal Loan Online
1. Check Eligibility Criteria
Every lender has specific eligibility requirements related to age, credit score, income level, and so on. Reviewing these criteria in advance can help you avoid potential rejections and save time during the application process.
2. Have a Clear Repayment Plan
A well-structured repayment plan is essential to avoid financial stress in the future. Use tools like an online personal loan EMI calculator – offered by reliable lenders such as SMFG India Credit – to estimate your monthly payments in advance and plan your budget accordingly. Also, consider your existing obligations and future financial goals for a comprehensive financial plan.
3. Choose the Right Loan Amount
It is important to borrow only what you genuinely need rather than opting for a higher loan amount simply because it is available. Borrowing more than necessary can lead to unnecessary financial strain and difficulty in repayment. Carefully assess your requirements and opt for an amount that fits within your financial capabilities.
4. Understand the Total Cost of the Loan
When evaluating a personal loan, do not focus solely on the interest rate. Consider associated fees and charges such as processing fees, prepayment penalties, and late payment charges to get a clear understanding of the total cost of borrowing. Doing so will help you make an informed decision and avoid any unexpected financial burdens.
Conclusion
Personal loans can be a valuable financial solution for addressing a wide range of expenses. By understanding their key features and carefully considering the important factors discussed in this article, you can make a well-informed decision that aligns with your financial goals.
It’s essential to compare different lenders, thoroughly review the terms and conditions, and plan your repayments wisely using an EMI calculator before committing to a loan. Taking these steps will help you manage your repayment effectively and avoid unnecessary financial stress.
*T&C apply. Please note that final approval, loan terms, and disbursement process may vary based on lender policies and borrower’s eligibility.