Different Types of Personal Loans in India

The prominent feature, as well as the major benefit of a personal loan, is its various uses. Based on its versatility, there are different types of personal loans in India.

Types of Personal Loans

Personal loans are collateral-free loans. So, the insurers offer them on the basis of your monthly income through self-employment, business, or service. We discuss the several types of personal loans below:

1. Wedding Loans

Weddings are a costly affair in India and people often take personal loans to manage wedding costs. This type of personal loan can save you from draining all your savings and rather repay the loan through installments. Also, when you run out of your savings to meet the costs, the wedding loans can help you conduct the functions and ceremonies.

2. Higher Education Loan

You can take advantage of the personal loan to fund and finance your own or any family member’s higher education. Therefore, this type of personal loan can be useful to pay for siblings’, children’s, or any member’s education. You can also pursue a course part-time while doing a job, business, or self-employment/personal practice and take a loan for the same. Submit your salary slips, other monthly income proofs, and bank documents. Similarly, there are employees who take a sabbatical and pursue some courses.

3. Home Renovation

Although banking & financial institutions provide home loans for purchase or building a new home, you may not get a home loan for renovation and remodeling. In this case, one may request a personal home renovation loan.

4. Medical Loan

In times of huge medical expenses, that the insurance does not cover, you can seek medical credit by taking a personal loan. In order to do this, you will have to state the reason for availing of a personal loan to be for medical purposes. You will also have to show relevant documents. This type of personal loan is considered a medical loan.

5. Covid Treatment Personal Loan

Ever since the pandemic has struck, people have faced serious financial woes while getting treatments of the Covid-19 virus if infected. However, many banks provide personal loans, as an expansion of medical loans, for covid treatments. This type of personal loan is Covid Treatment Loan. In some cases, medical loans include the Covid-19 cover, while in some cases, it comes exclusively.

6. Travel Loan

When you wish to fund a vacation plan without disturbing your savings and investments, you can take a loan for travel. Then, this type of personal loan is termed a travel loan. In order to avail of this loan, you will have to show travel documents. For instance, travel tickets, accommodation details, passport or Visa for international trips, etc.

7. Debt Consolidation Loan

Too many loans and credit card payments may get bothersome for us. As a result, we struggle to remember the payment due dates and the payment amounts for each. There are chances of missing the payments or late payments which will further pile up the debt amount on the existing loans. Moreover, you may run out of monthly savings if you make too many payments at several places. Thereby, all debts can be paid off by availing of one loan. So, consolidate all that in one type of personal loan.

8. Small Personal Loan

When you seek a small loan for some personal use and not for higher education or medical expense or any of the above-mentioned uses, this type of personal loan can be called a small personal loan. In this case, also, it can be put to multiple uses.

Apart from these, there are lenders who give special types of personal loans such as personal loans for teachers, women, or government employees. Personal loans may vary in their rates of interest depending on the loan amount and tenure. The loan granted further depends on the occupation and monthly income. It may vary for salaried and self-employed persons.

Wrapping it up:

Although all these types of personal loans can be availed of in a similar fashion, by submitting identity and income proofs, you may have to state the cause of why you are seeking a personal loan. Some additional documents may be required depending on the reason you mention requesting a personal loan. Also, the document verification for the salaried and the self-employed people may differ slightly.

FAQs
What type of loans are personal loans?
The different types of personal loans are unsecured loans. They are given without any collateral, co-applicant, or pledge of an asset.
What do banks or lenders look at when applying for a personal loan?
Banks and lenders look at the full financial profile and stability of the applicant of the personal loan. Be it any type of personal loan application, they thoroughly analyze your profile. They check the monthly income, steady source of income through bank statements, and credit history through CIBIL score.
How to check my personal loan eligibility?
  • You can check your personal loan eligibility on any eligibility checker site. You need to share basic information like name, PAN card, monthly income, salaried or self-employed, etc.
  • You can launch the Paytm app and under ‘All Services’ to check if eligible. Scroll to the ‘Loans & Credit Cards’ section. Tap on ‘Personal Loan’ to fill in the details. If you are eligible, you will be contacted by a representative
  • You can use Net banking to check if you are eligible and have any pre-existing offers from your bank
What is a Doctor Loan?
This type of personal loan is granted to self-employed doctors who wish to establish their own clinic or upgrade it. Also, to cover the costs and payments if they wish to buy more equipment or hire extra staff(s).
How is a personal loan different from payday loans or cash advances?
All types of personal loans, cash advances, and payday loans are given on the basis of monthly income. However, personal loans have higher income eligibility criteria than the other two. Also, personal loans grant higher amounts and more flexible tenures.
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