What is a Loan?

In simple words, a Loan is borrowing money that is to be returned later or a debt incurred by the lender. A loan is taken for a fixed tenure and required to be paid back additionally with a rate of interest.The borrower and the lender must mutually agree on the terms of the loan before it gets sanctioned.

The lender can be a financial institution, a bank, or a governmental body thatgives a certain amount of money to the borrower in time of emergency or to cover up other expenses such aswedding budgets, fees for foreign education,home renovation, etc.

A shortage of money can upsurge at any time. Hence, acquiring a loan is the easiest way to deal with the financial crisis. Nowadays, various digitized personal loan apps are available on android phones.Download the loan app from Google PlayStore and avail a quick loan in just a few clicks. Check the SimplyCash App to seek personal loans at a low rate of interest.

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Understanding Loans

Loan procedures may appear complicated and time-consuming. However, with improved technology over the years, understanding loans and applying for one has become easy.

Loans are mainly of two types secured and unsecured loans, under which all the sub-loans are defined.

An unsecured loan is a non-collateral loan that does not involve any risk of mortgaging the assets. Whereas,a secured loan requires collateral and involvesthe risk of mortgaging your assets like house, vehicle, property, etc.

Understand that a rate of interest,whether fixed or variable affects the loanEMI. A loan where the interest rate does not fluctuate and remains the same until the life of the loan;allows the borrower to accurately predict their EMIs.

Cash advances are also a type of loan that typically have high interest rates plus transaction fees. A loan might be good for someone sure of their ability to repay it within a stipulated time.

Loan Amount, Tenure, and Interest Rate

The loan amount is the principal amount that the borrower promises to repay. Once you know what loan amount each lender has to offer, negotiate to get the best deal that you can. Loan tenure is the number of years/months/days fixed to clear the loan in the form of instalments every month. The borrower is usually liable to pay interest on the borrowed loan amount until it is repaid within the given tenure.interest rate is the amount charged over the principal loan amount that the lender charges depending upon the prevailing interest rate.

Types of loans : Secured V/S Unsecured Loan

As the cost of living is going high,peopleoften fall short of funds at some point of the time during their life span and seek different types of secured and unsecured loans to overcome personal expenses and fulfil goals.

Many trusted banks and financial institutions have come to the aid for providing various types of secured and unsecured loans on a fixed and variable rate of interest

Let’s have a glance at different types of loans classified assecured and unsecured loans:

Home Loan

Home Loan provides bulk money to buy a home of your choice. The hike in property rates makes it difficult for the masses to own a dream house. Home loan simplifies the first significant step of making the downpayment so that you can fix your flat timely.

Top-up Loan

Top-up Loan is a benefit provided by financial institutions or banks on your existing home loan that can be used for home renovation and upgrade to trendy interiors.

Gold Loan

Gold Loan is one of the cheapest kinds of loans, most trustworthy and NBFC approved by RBI and financial institutions. A gold loan is one of the quickest and easiest forms of loans.

Vehicle Loan

Vehicle Loan is provided by almost all financial firmsat a very affordable rate of interest, which can be paid off within the tenure. This type of loan helps you fulfilyour dream of owning a car or a two-wheeler.

Loan against Property

Loan against Property is one of the most common types of secured loans, where you can collateral your residential, commercial property, or a plot to borrow funds for business growth or personal needs. Both salaried and self-employed can avail this type of loan.

Agricultural Loan

Agricultural Loan is mainly intended for farmers to support them with buying a farming land, cattle or, farm-related product.

Loan against Fixed Deposit

Loan against Fixed Deposit is when you have a fixed deposit in a bank, you can fill an application form and avail a loan against a fixed deposit. It is one of the secured loans where a loan tenure cannot increase than the FD’s tenure. The interest rate levied is comparatively higher than your FD.

Loan Eligibility Criteria

The loan eligibility criteria vary from one lender to the other. However, some basic loan requirements include

  • Self-employed or salaried individuals can apply for a loan.

  • The maximum given age limit is between 21-58 years or 21-65 years.

  • The credit score of the applicant should be between 580 to 600.

  • Income level counts to verify the applicant’s repayment ability.

Failing to meet the eligibility criteria can lead to rejection of the loan application, affecting the individual’s credit profile negatively.

Required Documents for Loan

Some lenders may require you to upload the document copies, while some can verify the financial status considering your Aadhar and PAN card number. Keep ready the following documents while registering for a loan online:

  • 1

    KYC documents, inclusive of Aadhaar Card, Mobile Number Linked to Aadhar, Pan Card, and Bank Account details.

  • 2

    Address proof on driving license/ Passport/Voter’s ID/Utility bills.

  • 3

    Income proof such as salary slips for salaried individuals and financial statements with photographs for self-employed.

  • 4

    Employee details or business details such as the name of the company, a position at the workplace, work experience, and job stability

How to Get a Loan?

Applying for a loan is no more a task as all the steps are now practically possible via digital loan apps available at our fingertips. Simply Cash is the latest loan app making it easier to acquire personal loans instantly in few simple steps.

  • Provide accurate and latest information when applying for a loan

  • Use the EMI calculator to derive a suitable EMI to plan your finances in advance

  • Verify the required personal and professional documents

  • Read the terms of the loan carefully before applying

  • Enter correct bank details where the loan amount should be credited

  • On verification of the given details, instant loan is disbursed in minutes directly in your bank account

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