Demand for personal loans increased and doubled in 2021 during festive seasons compared to the loan taken three years ago.In the current year, 2022, we might notice a further incline in demand for personal loans during this time of celebrations. In a recent report, the behaviour of particularly opting for a personal loan among people was increased to celebrate festivals with grandeur. The personal loan procedure is easy and quick. That is why festive countries like India choose to take a personal loan to celebrate festivals and fulfil all the aspects of the festival. The need for personal loans during festive celebrations is higher and more beneficial. A personal loan for festival resolves all the materialistic needs and goals. Let us learn more in detail about personal loans in this article.
About personal loans – Nowadays, many people choose to apply for a personal loan to reach and solve their more significant expenses. The main reason for the rise in popularity of personal loans is that they are unsecured loans, which means there is no need to provide any collateral. It is a quick and hassle-free process. You can avail of personal loans from NBFCs (Non-banking financial companies) or Banks. The add-on online services will transfer the loan amount to your account within 48 hours.
What do you mean by personal loan?
A personal loan is an unsecured credit, which means it doesn’t need any collateral. It is provided to borrowers, After checking their credit score, employment history, income level, repayment capacity, profession and credit history. Personal is also called a consumer and multi-purpose loan, used to resolve your debts or immediate needs. You can use a personal loan amount for planning your wedding or extra wedding expenses, home renovation, etc.
What are the benefits of an availing personal loan?
- Banks’ loans, like home loans and gold loans, require many documents. But a personal loan requires only minimal documents to be approved, and the approval process is quick.
- Various banks are providing personal loans as online services nowadays. You get the loan amount immediately when applying for a loan, provided you can repay EMI and interest rate.
- You have the capability and choice of choosing loan tenure in the case of a personal loan. Loan tenure usually ranges from one year to five years. However, you can choose a shorter loan tenure to save interest rates and pay back the loan quicker.
How does a personal loan work?
Firstly to avail of a personal loan, you need to apply for it to Banks, online, credit unions or personal loan lenders. Apply for an application and complete it. Then the lender will either approve or reject the application depending on various factors. If approved, you can go through the loan terms and decide to take the loan or not. If you agree to all the terms and conditions, the next step is to finish all the loan paperwork.
When completed, the lender will provide you with the decided and required fund amount; you can opt for the amount to be directly deposited into your account or given as a check. Once you receive your money, you have the right to use it for your required purpose. You then have to be timely in repayment according to the decided loan agreement. Be careful in case of default on a personal loan can cause an incline and damage your credit score. You can also lose your collateral in case of secured loans or can be sued by lenders.
Also Read: How to Get a Personal Loan: A Complete Guide on Eligibility and Documents
Types of personal loan
Personal loans are secured or unsecured personal loans. Lenders like Banks, Aggregators and Non-banking companies offer secured and unsecured loans. However, With Buddy Loan you can apply for a personal loan without pledging anything for security. With the easy and quick process of obtaining a loan makes Buddy Loan the number one choice for taking unsecured personal loans.
Secured loans are loans that will need some collateral accordingly. For example, if you have secured a loan with cash assets like a certificate of deposit (CD), savings account, or physical assets like a car or boat. If you cannot pay the loan later in the process, the lender can acquire your collateral to please the debt that is not repaid.
An unsecured loan is a loan that needs no collateral, guarantor or a specific asset to borrow loan amount from lenders. It would help if you had good credit scores to avail yourself of low-interest personal rates. If you have bad credit scores, it will charge you a high-interest rate. Factors like repayment history and debts determine credit scores and whether you’re a regular and older customer.
Most of the time, personal loan interests are charged heavily around this time during the time of festivals as these loans have no necessity of any security. People tend to have higher defaults at this time and take loans for the celebration as it’s considered very important. Some people will have problems repaying the interest rate as per their daily living expenses.
What Is The Maximum Amount You Can Borrow?
The eligibility to borrow loans differs depending upon their monthly earnings. While calculating the amount of the loan, a person’s monthly expenses and income are considered. The minimum loan amount offered by banks is 50,000. Although, loans, in some instances, can be lower when taken from Non-financial banking companies (NBFCs). With Buddy Loan, you can choose the loan amount of your choice, ranging from Rs. 10,000 to Rs. 15 lakhs at a lower interest rate starting from 11% p.a.
Who are eligible candidates to take a personal loan?
Preferably salaried individuals and self-employed individuals are eligible to take personal loans. The potential applicant must be older than 21 years and cannot be older than 60 years for salaried individuals. The potential applicant must be older than 21 years of age and cannot be older than 65 years for self-employed individuals. The minimum monthly income of the potential applicant must be Rs 18,000.
What does a maximum loan tenure mean?
The repayment tenure can range from 1 year to 5 years for a personal loan. Borrowers have the privilege to choose personal loan tenure, considering all the financial obligations of the borrower. If the borrower decides to take an instant personal loan for a longer tenure, the person will have to pay a higher interest rate for the loan amount.
Let’s talk about the report indicating the incline in availing loans at festivals.
The demand for personal loans during festival seasons indicated in the report.
Report by CRIF HIGH MARK Credit bureau –
In a recent report produced by CRIF Highmark, One of the credit bureaus said that the report that personal loan origination demand value doubled to 1.47 lakh crore in December of the year 2021 quarter and 2018, it was Rs.75,000 crore, Comparatively.
There was a significant rise in the value of origination shares for state-owned banking and non-banking lenders in three years. Private sectors saw a decline in the value of origination share for the same situation.
In terms of volume, there was a decrease in the share of public sector banks. Review specified in a report that in terms of volume, there was an increase in private banks and NBFCs.
Other loans during festival seasons indicated in the report.
Report by CRIF HIGH MARK Credit bureau –
In a row with sales data appear to demand resistance in the section, two-wheeler loans saw a decrease in origination in terms of value to Rs 15,281 crore in the third quarter of the financial year 2022 from Rs 16,393 crore in the financial year 2019 as given in the report.
In terms of volume in origination, there was an evident 29 percent decrease to 20.4 lakh accounts in Q3 that is ( July, August, September ) in the financial year 2022, and from 28.7 lakh accounts in Q3 that is ( July, August, September ) in the financial year 2019.
Auto loans saw flat growth in origination in terms of value from Rs 54,367 crore in the financial year 2019 to Rs 56,420 crore in the financial year 2022.
In the home loan section, There was a 40% growth inclined in terms of value to Rs 1.93 lakh crore in October to December for the financial year 2022 as compared to the December quarter of the financial year 2019. Additionally, the report added that private banks are doing better in terms of volume and value front.
The consumer durable loans section had a 32 percent growth in origination in terms of value to Rs 26,075 crore in the financial year 2022 from Rs 19,683 crore in the financial year 2019.
Also Read: Quick Personal Loan for Eid Festive Season
The bottom line
To this, we conclude that a personal loan is the most effortless and hassle-free loan among all the other loans. Personal loans could be for various reasons, and It has the highest approval rate; this is why many people opt for personal loans at festivals. They use the loan amount to perform various rituals and celebrate in the way they wish. Taking personal loans on occasions like this and being able to avail of everything needed for the festival makes the festival special.
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