Personal Loans Glossary
Every time you read about personal loans, there are recurring terms that you will come across. Some may be familiar with all the terms, whereas, for those looking for a personal loan for the first time, these words may be completely new.
If you are applying for an instant loan, there is no reason for you to be confused. Here’s an important personal loans glossary that will aide you significantly:
Borrower/Lender:
Borrower: A borrower is an individual who needs the funds and avails it from a financial institution in the form of a loan.
Lender: A lender is an institution that provides or gives the funds to the borrower.
Principal Amount:
The amount of funds you borrow is known as the principal amount. It does not include any interest or fees.
Fixed Interest Rate:
When funds are borrowed, an interest rate is charged, in percentage, by the lender on the principal amount that is availed by the borrower.
When this percentage remains unchanged throughout the tenure of the loan, it is known as a fixed interest rate.
Loan Terms:
When you take a loan, there are certain terms and conditions involved. This is known as loan terms. It may include the tenure of the loan, interest rate, any processing fee, pre-payment charges, etc.
Loan foreclosure:
Every loan has a pre-decided tenure. When you decide to close a loan before the completion of the tenure, in full or partially, it is known as loan foreclosure.
Loan Prepayment Penalty:
When you foreclose a loan, partially or in full, it may attract a certain amount of charges or fees. This fee is known as a pre-payment penalty.
Credit report:
A report that is generated by a certified credit agency that details an individual’s creditworthiness is known as a credit report.
Credit score:
A three-digit number that is computed and assigned to the individual based on his credit history is known as a credit score. It defines the creditworthiness of the person and can be found in a credit report. Credit scores are also popularly known as CIBIL score, as the credit ranking agency, CIBIL is known to be one of the foremost rating agencies in India. 750 and above is considered to be a good CIBIL score. However, you can avail a personal loan for a low CIBIL score through Finnable.
Credit History:
The record of all your transactions including your income and expenditure, borrowing, and spending is known as credit history.
Personal Loan Interest rate:
The interest rate applicable on a personal loan is known as the personal loan interest rate. This differs from lender to lender. For instance, the personal loan interest rate at Finnable starts at 16% up to 26%.
Loan tenure:
A loan tenure is defined as the duration through which a loan is repaid. As a borrower, you can choose to have a short-term loan tenure or a long-term tenure. The personal loan tenure at Finnable starts at 6 months and can be up to 5 years.
Unsecured Personal Loan:
Loans that availed without collateral or pledging an asset against the principal amount are known as unsecured personal loans. They are also known as collateral-free loans. These loans can be availed to pay for any personal expense. Banks as well as Non-Banking Financial Companies (NBFC) are known to disburse quick and easy unsecured loans.
Equated Monthly Installments (EMI):
Equated Monthly Installment (EMI) is a fixed amount you repay the lender on a specific date, every month until the completion of the loan tenure. It is a cumulative amount that comprises the principal and the rate of interest that is applicable.
Top Up Personal Loan:
A borrowing facility that is given to you, by your lender, where you can borrow additional funds over and above your existing personal loan is known as a top-up loan. A top-up loan is not a new loan.
Conclusion
A personal loan glossary comes in handy if you are planning to take a personal loan. Before you take a loan, you should know that there are various types of personal loans disbursed by NBFCs.
Finnable disburses education loan, travel loan, wedding loan, home renovation loans, medical loans, etc. The minimum amount you can avail of is Rs. 50,000 and the maximum loan amount can be up to Rs. 10 lakhs.
Being collateral-free loans, the interest rate starts at 16% and your maximum loan tenure can be for 5 years. Taking an instant loan through Finnable is easy and can be done through their personal loan app. All you will need is your KYC details and income proof.
The entire process can be completed in 3 simple steps and the funds are credited within a few hours of document verification.
Learn with Finnable
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