Have you ever been in a situation where you have fallen short of money and have nowhere else to go but your parents, family members, and friends? I think we have all been through this situation. I am sure family members and friends will help in this situation but, what if they really don’t have enough money? This leaves you with no-where else to go but a bank, private investor or NBFC. Nowadays, we have banks and NBFC’s offering a product called personal loan which offers loan within 30-60 minutes with minimum documentation. Let us briefly understand what personal loan is and on what situations we can apply and take a personal loan from a bank.
A personal loan is an unsecured loan given by the bank/NBFC without any guarantee or security. The main eligibility criteria are your CIBIL score which is dependent on various factors like your monthly salary, your employment history, your credit card payment history and much more. A good CIBIL score can range from 700 to 900 (out of 900). A good CIBIL score does not have any correlation with the amount you may get for a personal loan. Usually, the amount is 12 times the monthly salary when you apply at HDFC bank for a personal loan but can vary from bank to bank.
I will not go into more details about a personal loan in this blog but would like to highlight some common reasons when people apply for a personal loan in India.
- Personal loan to buy consumer durable products
Since personal loan can be taken for a small amount of as low as Rs 25000, people take this as an opportunity to buy their favorite consumer durable or white goods for their home and offices. People can buy Big LED TV’s, refrigerators, washing machine and almost anything which they want.
- Personal loan for Weddings
Who does not want a wedding to be a lavish and one if the best events of their life? Personal loan for weddings can be taken by brides, grooms or their family members to make the occasion memorable. The loan can be used for buying jewelry, banquet bookings or any other arrangements which family would like to make for the special occasion. Since this approval and disbursal process is simple, a lot of people apply for this loan in India.
- Personal loan for International Holidays
Every youngster has international holiday travel aspirations, however, low salary and savings do not allow them to fulfill these aspirations. With the help of a personal loan, now youngsters now travel across the world. Personal loan for travel is also very popular among honeymoon couples who want to travel internationally on their honeymoon days.
- Personal loan for Hospital expenses
I always believe that medical insurance is a must for every individual. Especially when you live in an environment which is full of pollution. However, most people don’t think likewise and when they end up with heavy bills in hospitals, they realize its importance. Moreover, medical insurance doesn’t cover people with over 60 years of age (except for few policies which cover till 70 years). Personal loan for medical expenses is therefore helpful for many low and middle-income people to clear hospital related liabilities.
- Personal loan for Child’s education
Fees for a private engineering or an MBA school may not be affordable for everyone. However, people don’t mind spending a fortune for their child’s education in India. Although there is an option for an education loan at a lower interest rate, sometimes people are not eligible for an education loan due to many reasons. Also, education loan disbursal time is more and sometimes have an impact in admission for the child due to fees deadlines. A personal loan becomes handy in these situations. With less documentation and disbursal time, this has become an option for parents looking to pay fees for their child’s education.
- Personal loan for iPhone
iPhone is a fashion statement and a status symbol nowadays. With new iPhone X priced at over Rs 100,000, it makes it not affordable for youngsters (at-least who want to buy from their own pocket). This is weird and funny, but true, people (especially youngsters) to apply for a personal loan to buy expensive iPhones nowadays. I have also seen guys buying iPhones, not for themselves but their girlfriends (lucky girls).
I am sure there are more reasons why people take a personal loan in India because it is a product which can be used for any purpose with no questions asked by the bank of NBFC. If you have taken a personal loan for some weird reasons then feel free to share on the comment box below.