What are Personal Loans?

<h1>What are Personal Loans?</h1>Author: <a title="Madhu Balakrishnan" href="http://www.articlesbase.com/authors/madhu-balakrishnan/115238.htm">Madhu Balakrishnan</a> What are personal loans? Personal loans are loans which are given without any specific purpose in mind. In simpler terms, unlike a <a href="http://auto.indiamart.com/" target="_blank">car loan</a> or a home loan, a personal loan can be put to any use by the beneficiary according to his/her discretion. Personal loans can be used for a wide variety of purposes, and there is no restriction or compliance with specific conditions in its usage. This makes the loan very convenient for a borrower. The loan can be repaid like all other loans through the equated monthly instalment (EMI) process where a fixed amount is paid each month. The distinguishing features of personal loans are as follows: <ul> <li> They are provided without any specific purpose in mind.</li> <li> They are usually unsecured loans.</li> <li> They come at a higher rate of interest than other loans.</li> <li> They are for a relatively shorter duration, less than 5 years usually.</li> </ul> Advantages of a personal loan <ul> <li> The biggest advantage of a <a href="http://www.icicibank.com/" target="_blank">Personal loan</a> is that it is an all-purpose loan. So you can take a personal loan to take your family on a trip to Europe, or buy the latest Sony LCD TV, or even to pay off your credit card dues. Your bank doesn’t care as to how you use the loan amount sanctioned to you.</li> <li> It also takes the least amount of time and paperwork to be sanctioned as compared to other retail loans. So if you are in urgent need of funds, a personal loan is the way to go.</li> <li> And the icing on the cake is that unlike other loans, you don’t need to offer anything as security or collateral. You don’t even require a guarantor.</li> </ul> Taking a personal loan is the easy part of the transaction, but before doing so one needs to ask oneself whether the loan is actually required. One must not use money just because it is available. Also, banks make all efforts so that people take personal loans. The most common strategy used by them is to send a letter pre-sanctioning a loan. The person receiving the letter is happy that there is an amount ready and waiting for him/her to use it but he/she needs to see whether this loan can be repaid and also whether he/she actually needs the funds for some important purpose. Caution Go for a personal loan only when you are in urgent need of cash or in an emergency. Interest on personal loans can be as high as 16% to 25%, so don’t use them for indulging in luxuries.About the Author: I am the author of articles on personal loans, insurance, credit cards and other such subjects and you can find my articles on <a href="http://www.rupeetalk.com/"> 
 <a target="_blank" href="http://www.rupeetalk.com">http://www.rupeetalk.com</a></a>Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/loans-articles/what-are-personal-loans-748388.html" title="What are Personal Loans?">What are Personal Loans?</a>

What are personal loans?

Personal loans are loans which are given without any specific purpose in mind. In simpler terms, unlike a car loan or a home loan, a personal loan can be put to any use by the beneficiary according to his/her discretion. Personal loans can be used for a wide variety of purposes, and there is no restriction or compliance with specific conditions in its usage. This makes the loan very convenient for a borrower. The loan can be repaid like all other loans through the equated monthly instalment (EMI) process where a fixed amount is paid each month. The distinguishing features of personal loans are as follows:

They are provided without any specific purpose in mind.

They are usually unsecured loans.

They come at a higher rate of interest than other loans.

They are for a relatively shorter duration, less than 5 years usually.

Advantages of a personal loan

The biggest advantage of a Personal loan is that it is an all-purpose loan. So you can take a personal loan to take your family on a trip to Europe, or buy the latest Sony LCD TV, or even to pay off your credit card dues. Your bank doesn’t care as to how you use the loan amount sanctioned to you.

It also takes the least amount of time and paperwork to be sanctioned as compared to other retail loans. So if you are in urgent need of funds, a personal loan is the way to go.

And the icing on the cake is that unlike other loans, you don’t need to offer anything as security or collateral. You don’t even require a guarantor.

Taking a personal loan is the easy part of the transaction, but before doing so one needs to ask oneself whether the loan is actually required. One must not use money just because it is available. Also, banks make all efforts so that people take personal loans. The most common strategy used by them is to send a letter pre-sanctioning a loan. The person receiving the letter is happy that there is an amount ready and waiting for him/her to use it but he/she needs to see whether this loan can be repaid and also whether he/she actually needs the funds for some important purpose.

Caution
Go for a personal loan only when you are in urgent need of cash or in an emergency. Interest on personal loans can be as high as 16% to 25%, so don’t use them for indulging in luxuries.

I am the author of articles on personal loans, insurance, credit cards and other such subjects and you can find my articles on
http://www.rupeetalk.com

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