Last Updated on July 26, 2019 by Gopal Gidwani

As a salaried employee, it’s great to have a regular, steady paycheck at the start of every month. However, unexpected situations can happen at any time, for which you require additional funds- and your salary might not be enough to cover the added expense, even if you have some money saved up. In these situations, taking a personal loan is a great option to manage the financial expense, while also building your credit score.

There are two main types of personal loans that you can take: secured loans and unsecured loans. When you take a secured loan, you have to pledge your personal assets (of an equal amount to the loan you want to avail) as collateral to the lender. This reduces the risk of default that the lender would be undertaking.

However, many people do not want to pledge collateral against a loan, and others simply do not have sufficient collateral to pledge in the first place- which makes it difficult for the latter to get access to formal credit during times of need. This is why unsecured loans are a great alternative.

With unsecured loans, the borrower does not need to submit any collateral. In addition, these loans can be availed online, without filling out tedious paperwork and submitting numerous documents. To know more about availing an unsecured loan, we’ll discuss below the eligibility, features and benefits.

Personal Loan Eligibility
In order to apply for a personal loan, you need to meet the lender’s eligibility criteria. Basically, an eligibility criteria is a set of parameters that determine whether a borrower can qualify for a loan from a particular lender. Personal loan eligibility will vary from lender to lender, and it’s extremely important to know whether you meet a lender’s eligibility.

If you apply for a loan and without knowing their eligibility criteria, your loan will be automatically rejected if you didn’t match all the basic qualifications. Here are some examples of personal loan eligibility:

1. Age
2. Monthly Income
3. Employment type (salaried or self-employed)
4. CIBIL score
5. Location

Personal Loan Features & Benefits

1. No collateral required: Unsecured personal loans require absolutely no collateral. One can get a loan approved on the basis of other eligibility criteria and KYC documents.
2. Flexible repayment tenures: When you apply for a personal loan, you can select a comfortable tenure to repay the loan. This means that you can select a longer tenure to pay off your loans, which will reduce your monthly EMI burden.
3. Low interest rates: Compared to that of credit cards, unsecured loans have lower interest rates, especially if you have a good CIBIL score and if you are applying for a higher amount.
4. Multiple use cases: Personal loans can be taken for a multitude of use cases, such as wedding, vacations / travelling, festive celebrations, high bills, medical emergencies, vehicle purchase, home repairs, and many more.
5. Debt consolidation: Personal loans are excellent for debt consolidation. If you have multiple ongoing debt repayments, you can take out a loan equivalent to your entire outstanding amount, and pay off your other creditors in one shot. You will have to only pay one EMI every month to the debt consolidation lender. The added benefit is that debt consolidation loan comes at a much lower interest rate than paying numerous outstanding loans.
6. Completely digital process: No need to fill out lengthy, tedious paperwork, or submit numerous documents! Unsecured personal loans can be easily availed online, from the comfort of your own home. Your loan approval and disbursal can be done in as little as 48 hours or less!
7. Increase credit score: When you take out a loan and make timely repayments, you stand to increase your credit score. This means that if you choose to apply for a larger loan in the future (such as a home loan), lenders will be willing to offer you larger loan amounts with attractive interest rates and repayment tenures.
8. Keeps budget in check: Instead of dipping into your savings account for any financial emergency, take out a personal loan for the amount you need. Because personal loans have flexible repayment tenures, the EMIs you have to repay can be easily accommodated in your budget

Conclusion
Whatever your situation, personal loans can help assist you financially and get your personal finances on track - all the while, helping you rebuild your credit score. Be sure to check your personal loan eligibility before you apply.