What is Unsecured Loan?
An unsecured loan is a personal loan that does not require any collateral or asset against the availed amount. Unlike secured loans like a home loan or a vehicle loan, the borrower is not under any compulsion to pledge any asset of value while availing the loan amount from a financial institution.
Unsecured personal loans are typically available for short-term cash crunch situations. Be it to meet the expenses of going on a vacation or renovating your home or even for medical expenses. Unsecured personal loans can be availed quickly with minimum documentation. However, a high credit score can help borrowers in getting better interest rates against personal loans.
Understand how Unsecured lending and Unsecured Personal Loans work
Loans are usually secured or unsecured. Secured personal loans require collateral as a security against the loan. In case of non-payment of the loan by the borrower, the lender is free to dispose of the collateral to recover the funds.
Unsecured loans, on the other hand, do not require any collateral for the loan to be availed. Lenders will usually check the credit and employment history of the borrower to assess creditworthiness. If a borrower is found creditworthy, lenders will approve the unsecured loan.
Unsecured loan interest rates are higher as lenders face a higher risk owing to the absence of a collateral as compared to secured loans. In addition, all types of unsecured loans have lower loan amounts and shorter tenures as compared to secured personal loans.
Eligibility, Process and Benefits of Unsecured Loans
- No Collateral: One of the benefits of an unsecured loan is that it does not require the borrower to keep any asset as collateral or security at the time of availing the loan.
- Minimal Eligibility Criteria: To be eligible for an unsecured personal loan, the borrower has to be an Indian citizen, between the age of 20-65, employed in a private enterprise, and have a minimum monthly salary of INR 25,000.
- Easy Application Process: Applying for an unsecured loan is easy. Along with the loan application, borrowers have to attach their PAN card, Aadhar card, as well as 1 months’ salary slip or the bank statement of the salary account. On approval of the documents, the unsecured loan will be disbursed within a short time.
- Flexible Payment Solutions: Unsecured loans come with flexible repayment options. Borrowers can choose their repayment strategy based on their income and expenses.
Types of Unsecured Loans
Several types of unsecured loans are available. Finnable offers a diverse array of customisable unsecured personal loans that can be used for a variety of purposes. Each of the following unsecured loans serves a specific purpose and offers borrowers the flexibility to address their financial needs:
- Marriage Loans: Marriage loans are specifically designed to cover the expenses related to weddings, such as venue bookings, catering, decorations, and other wedding-related services. These loans help individuals or families manage the costs associated with organising a wedding.
- Home Renovation Loans: Home renovation loans provide funds for renovating or improving your existing home. Whether it’s remodeling the kitchen, upgrading the bathroom, or renovating the entire house, these loans can help cover the expenses involved in making your home more comfortable or aesthetically pleasing.
- Medical Loans: Medical loans are aimed at covering medical expenses, including surgeries, treatments, medications, or hospital bills. These loans help individuals manage unforeseen medical emergencies or planned medical procedures that may not be fully covered by insurance.
- Personal Loans: Personal loans are versatile unsecured loans that can be used for various purposes, such as debt consolidation, home repairs, travel, or any other personal expenses. They provide borrowers with the flexibility to use the funds as per their requirements.
- Education Loans: Education loans are designed to finance the cost of education, including tuition fees, books, accommodation, and other related expenses. These loans assist students or their parents in funding higher education or professional courses
- Vehicle Loans: Vehicle loans, also known as auto loans, are used to finance the purchase of a new or used vehicle. These loans allow individuals to own a car or motorcycle by providing the necessary funds, which are repaid in installments over a specified period.
- Shopping Loans: Shopping loans are unsecured loans specifically tailored for retail purchases, such as consumer electronics, furniture, appliances, or other retail goods. These loans offer convenient financing options for individuals who want to make purchases without using their savings or credit cards.
- Travel Loans: Travel loans provide funds to finance travel expenses, including flights, accommodation, transportation, and other travel-related costs. These loans allow individuals to fulfill their travel aspirations and explore new destinations without putting a strain on their immediate finances.
Who is eligible for an Unsecured Loan?
Applicants looking for an unsecured loan from Finnable must meet the following criteria:
- Age Requirement: To be eligible for an unsecured from Finnable, you must be at least 21 years old or at the most, 62 years old.
- Employment Status: Finnable typically requires applicants to be permanently employed with a private or public organisation for the past six months.
- Credit History: Finnable evaluates your credit history to assess your repayment behaviour and credit worthiness. While a good credit history is beneficial, Finnable also considers first-time borrowers with no credit history.
- Documentation: Finnable requires you to submit certain documents for verification, such as identification proof, address proof, income proof, and past six months’ bank statements.
- Education loan specifications: If you are looking for an unsecured education loan from Finnable, then you must have a willing co-applicant and official admission letter for the course you are taking the education loan for.
How to get Unsecured Personal Loans online with Finnable?
Finnable offers various types of unsecured loans and applying for one is quick, simple and hassle-free.. You need to create your profile either on our App or website by filling in the required details. Next, you need to upload the documents required for KYC compliance. Following this, select the type of unsecured loan you require, the loan amount you need, and the repayment tenure. Click on ‘apply’ and that’s it.
You can get the funds disbursed within just 6 hours of loan approval.
The various types of unsecured loans we offer are Wedding loans, Travel loans, Medical loans, Vehicle loans, Education loans and Home renovation loans. Select the one that best suits your needs.
Conclusion
You can avail of an unsecured loans to tied over a financial shortfall. We, at Finnable, offer personal loans for travel, weddings, home renovation as well as medical emergencies. We offer instant loans up to INR 10 lakhs at attractive interest rates with minimal documents, and a loan tenure of upto 60 months.
FAQs on Unsecured Loans
An unsecured loan is a type of loan that does not require collateral or security. It is based on the borrower's creditworthiness, income, and other factors. Unlike secured loans backed by an asset, unsecured loans are approved solely based on the borrower's creditworthiness and ability to repay.
The interest rate on unsecured loans is typically based on various factors, including the borrower's credit score, income, employment history, loan amount, loan term, and prevailing market conditions. Lenders assess these factors when determining the interest rate that reflects the risk associated with lending to the borrower.
The main difference between an unsecured loan and a secured loan is the requirement of collateral. Unsecured loans do not require collateral, while secured loans are backed by an asset, such as a property, vehicle, or savings account. Unsecured loans rely solely on the borrower's creditworthiness, while secured loans offer lenders the security of the collateral.
The time taken for unsecured loan approval can vary depending on the lender's processes, the completeness of the application, and the borrower's credit profile. Generally, unsecured loans may have a quicker approval process compared to secured loans because they don't involve collateral assessment. Some lenders, including Finnable, offer fast approval and disbursal process to expedite the loan application timeline.
The maximum loan amount for an unsecured loan varies among lenders. It is based on factors such as the borrower's creditworthiness, income, repayment capacity, and the lender's policies. Finnable offers unsecured loans of up to Rs. 10 lakhs.
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