Finance

How a personal loan does works and for what purposes it can be used?

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As the name suggests, a Personal Loan is an unsecured loan taken by a person to fulfill his/her personal needs. It can be taken from a bank or a non-banking financial company.

Nowadays, a large number of people are relying on personal loans for their purchases. The number of consumers is increasing rapidly because of EMIs (Equated Monthly Installments).

What is an equated monthly installment or EMI?

 A fixed amount of payment decided by the borrower to a lender, to be paid at a specific date each month this payment method is termed as EMI or equated monthly installment. In simple terms, it is an equal amount of money paid by a borrower to a lender every month on a specific date, just as the name suggests. This monthly payment contains both principal and interest so that the borrower can pay the full amount of money within the decided amount of time. This method of payment helps people to buy stuff which they cannot buy in a single payment like house, car, furniture, renovation, etc.

For what purposes a personal loan can be used?

A personal loan can be used for any type of personal financial need such as:

  • You can use a personal loan to consolidate your debts.
  • You can pay your credit card debts.
  • You can finance a home or renovate your home.
  • You can cover all your wedding expenses with a personal loan.
  • You can finance funeral expenses.
  • One of the most important things you can pay medical bills with a personal loan.
  • You can buy a car, boat, bike, truck, or whatever you want.
  • You can take a vacation you were always dreamed of.
  • You can make large purchases.

Is there a restriction on loan amount and duration?

Well, there are no restrictions on how much amount one can borrow or for how much time, it depends upon the lender. It also depends on how much you earn and whether you’re salaried or self-employed. Most lenders set their minimum loan amount to 30,000 and a one to five years time period. Different lenders offer different loan amounts and interest rates depending on their terms. You can search online for moneylenders in your area. For example, you can search for Moneylender Singapore and you will get information about moneylenders in Singapore. Getting a personal loan nowadays is easier than ever before.

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