Personal loans are unsecured loans provided by the banks without taking any collateral security, though some PSU banks may insist on a guarantor. Personal loan can be taken for any personal requirement ranging from marriage to holidaying or maybe to buy a lifestyle product or medical emergencies. The end purpose is not important to the bank as long as it is not for speculative trading.
The personal loan amount and rate of interest is dependent on three major factors. First are borrower's income and his ability to service the loan. Second is the company for which the borrower is working and third is the credit history of the borrower. The bank may reject the loan if the borrower has defaulted in his past dues on loans.
Once the borrower is qualified for the personal loan it takes close to about three days or so to get the loan amount disburse. The personal loan repayment is in equated monthly installments and tenure can vary from 1- 5 years.
It is advisable for a borrower to get in touch with as many banks as possible and get them to make loan offers to him. Then he can then try to negotiate with them and select the most cost effective option for him. The borrower will also have to take into consideration the processing fee and prepayment charges while finalizing the lender
Always remember that personal loan should be taken in dire emergency as far as possible. Being classified as unsecured loans, these loans are usually more expensive in terms of interest rate compare to any other loan taken against collateral security like gold jewelry, high surrender value