What is Unsecured Loan In India - Meaning and Requirements

One of the things you can wish for when you are taking up a loan is financial security. When you apply for a loan, you often have to give the lending institution a proof of security or reassurance that you will pay the amount back. You give it an asset of equivalent value as the loan amount that the lending firm can sell or auction off if you fail to give the loan amount back to it- this is known as secured loan

However, in case of an unsecured loan you do not need to offer any collateral in exchange for money. Read along to understand what an unsecured loan in India is and its requirements.

What is an Unsecured Loan?

An unsecured loan is that type of borrowing for which the borrower does not need to give a personal asset in exchange for the money he/she receives. Usually, the item given to the lending institution is called a collateral and this can be your house, your car, or your ornaments. With an unsecured loan, you need not give up anything valuable to you against your loan.

In an unsecured loan, the lender only looks at the applicant’s repayment capacity, income, debt-to-income ratio, history of borrowing, etc., all covered in the credit score. Deciding on this, the lending firm decides to give you an unsecured loan. The loss in the case of default is taken up by the firm - that is the risk involved. To manage their finances, the lending institution can levy higher interest rates than normal.

Types of Unsecured Loans

Personal loans are typically unsecured loans. There are different types of personal loans. You can avail of a loan for shopping purposes when there is a festive season coming up. You can take up financial support for a wedding in the family, to arrange for the venue, rituals, gathering, caterers, etc. A personal loan could be used for home renovation or help people to upgrade their homes with new appliances. Some people opt for a personal loan to cover their travel expenses while planning a vacation. It is also common for ambitious working professionals to take up personal loans for furthering their education abroad.

For salaried and self-employed people alike, some personal loans can help them fund a professional trip with stay and food. In fact, self-employed people might require a loan to help cover business expenses like upgrading of equipment, mass hiring, or relocation. Unsecured loans also come into action when there is a medical emergency to be treated within a short span of time. Sometimes, a loan is taken out to cater to previous debts and consolidate them to avoid heavy penalties. 

Benefits of Unsecured Loan

An unsecured loan or a personal loan has several advantages:

• You don’t bear any risk of losing your assets.
• You need not restrict the usage to any one particular application.
• Obtain  lower interest rates if you have a strong CIBIL score.
• Minimum eligibility documents are required.

Personal Loan Eligibility

The personal loan eligibility criteria for taking up a loan under SMFG India Credit is minimum. The most basic requirement is that you must be a Resident Indian between 21 years and 60 years of age. You must have a minimum CIBIL score of 750 and must have a regular income. If you’re a salaried employee, you must belong to a private limited company or a public sector undertaking firm with a minimum salary of INR 20,000 a month. However, if your city of residence is Mumbai or Delhi, then your salary per month must touch INR 25,000. For a self-employed person, there are minimum turnover standards that you must cater to. Plus, your experience in business and in the current line of work must align with the personal loan eligibility criteria.

Conclusion

Taking up an unsecured loan is a great way to find your start towards your dreams. You can avail of funds of up to INR 25,00,000* without worrying about losing a precious asset to the lending firm. Moreover, the flexibility of funds distribution can equip you with the power of dreaming big.

Where better to apply for an instant online personal loan than SMFG India Credit? Our affordable interest rates start from only 11.99%* per annum and you can repay the entire loan amount in a comfortable 60 months. Our instant online loan approval can save you the time and trouble of having to visit a branch. Once you gain the final approval according to our online personal loan eligibility criteria calculator, the funds will be disbursed to your account within 72 hours*. Apply now!