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The Power of Security: Demystifying Personal Loan Collateral

The Power of Security: Demystifying Personal Loan Collateral

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When venturing into personal finance, whenever question of collateral often emerges as a critical factor in securing a personal loan. Many individuals may wonder if their hard-earned assets are indeed indispensable for obtaining financial assistance. This article covers collaterals in personal loans, explain, what it entails and why it is necessary in the lending landscape.

What is Collateral in Personal Loan?

Collateral, in personal loans, refers to assets that a borrower pledges as security for the repayment of the loan. These assets act as a guarantee for the lender, providing a safety in case the borrower defaults on the loan. Common examples of collateral include real estate, vehicles, valuable jewellery, or other high-value possessions. However, the concept of collateral is fundamentally rooted in risk mitigation, reassuring lenders that they can recoup their losses if the borrower fails to fulfil their repayment obligations.

However, not all personal loans require collateral. There is a category of personal loans called unsecured personal loans. Which doesn’t need you to provide collateral against the loan amount. Whereas, the category of secured loans requires collateral against the loan amount. We discuss the differences between both these categories in our other blog articles as well.

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Why is Collateral Needed for Personal Loans?

  • Risk Mitigation and Financial Security
  • Collateral serves as a safeguard for lenders, mitigating the risks associated with unsecured loans.
  • Without collateral, lenders face higher uncertainty about borrower’s ability to repay, especially in the event of unforeseen financial challenges.
  • Lower Interest Rates
  • Offering collateral often results in lower interest rates for borrowers.
  • Lenders perceive collateral as a tangible commitment, and in return, they may extend more favourable loan terms, including reduced interest rates.
  • Access to Higher Loan Amounts
  • Collateral-backed loans typically allow borrowers access to higher loan amounts.
  • The value of the collateral determines the loan limit, enabling individuals to secure larger sums than they might with unsecured loans.

Creditworthiness

Collateral acts as a tangible demonstration of the borrower’s commitment and financial stability. For individuals with less-than-perfect credit histories, providing collateral can enhance their chances of loan approval, as it reassures lenders about the borrower’s intent to repay.

Flexible Repayment Terms in personal loan

Collateral often leads to more flexible repayment terms. Lenders, assured by the presence of collateral, may offer extended repayment periods or customised repayment schedules, easing the financial burden on the borrower.

Conclusion

The inclusion of collateral in personal loans is not a mere bureaucratic requirement but a strategic component that benefits both lenders and borrowers. The collateral serves as a tangible expression of commitment, facilitating lower interest rates, access to higher loan amounts, and increased flexibility in repayment terms. While the prospect of pledging assets may seem daunting, the advantages far outweigh the concerns, providing individuals with a means to secure financial assistance on more favourable terms.

Tips to get a low rate of interest on your Personal Loan

Tips to get a low rate of interest on your Personal Loan

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When you need instant money and don’t want a headache, a Personal loan is there to your rescue. Availing a Personal loan can come in handy whether it’s a medical emergency at home, a wedding, a vacation, going abroad for higher education, or there is a home renovation that you’ve been planning on doing for a very long time.

A personal loan can be availed from banks/NBFCs-Non-banking financial institutions with little or no paperwork. Banks or other financial institutions decide a personal loan rate of interest, which varies for different banks/institutions. There are various ways by which you can avail a loan with a low personal loan interest rate.

Tips to get a low Rate of Interest

Before availing a personal loan, you can keep these tips in mind to help you avail the cheapest rate of interest

●     Improve your Credit Score

A high credit score or CIBIL score is an indicator of your creditworthiness. Banks and NBFCs offer a low rate of interest to applicants with a high credit score. A credit score ranges between 300-900. 300- very poor and 900-fantastic.

A credit score of 750 and above means you have a higher chance of availing your personal loan at a low-interest rate. So, if your credit score is low, try to improve it and get lower interest rates.

●     Timely Repayments

Make sure you avoid missing any repayment. If you miss a loan or a credit card repayment, your credit score gets badly affected; and mind it, all banks and NBFCs ask for your repayment history before deciding on a rate of interest. Therefore, to have a low rate of interest, you must make repayments on time.

●      Compare the Rate of Interest

Before applying for a personal loan, remember to compare the interest rates of all banks and non-banking financial institutions. This competitiveness in the market will help you avail a personal loan at the lowest interest rate possible.

●     Look for Offers

Keep an eye on offers, especially during festive seasons. Most banks and financial institutions offer a low rate of interest for a limited time period. You can make the best out of this opportunity by keeping a check on offers.

●     Negotiating

When you’re an existing customer or you know the loan provider personally, you can always negotiate for a lower interest rate. It is advisable that you submit a formal request to the loan provider and let them know. Negotiating on a personal level is also an option if you are on good terms with the bank or financial institution. Availing a personal loan is the easiest way to fulfill your financial needs quickly. Out of all the factors mentioned above, the CIBIL score or the credit score is the most crucial factor in helping you get a personal loan at a low rate of interest. So, always maintain a good credit score and keep checking the score to ensure that it never goes awry.

Read more:-https://networkustad.com/2022/12/01/the-most-reliable-platform-to-get-no-credit-check-personal-loans/

What is the difference between a loan agent vs. Personal Loan Agent?

What is the difference between a loan agent vs. Personal Loan Agent?

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When you need a loan, you may wonder if you can use a loan or personal loan agent. Though both will assist you in filling out the loan application and ask about your financial situation, the two are different roles. In the loan business, most individuals who act as middlemen who act as middlemen are agents. 

The agent helps the customer secure the loan and can facilitate the whole process from borrowing until the customer pays back the loan. In this article, you will learn the difference between the loan agent and the personal loan agent found in financial intuition, especially for loan products.

Who is the loan agent?

A loan agent is an employee or officer at a bank or other financial institution providing loans. The major task of this agent is to ensure that customers can secure a loan by connecting them to the lender.

The agent will facilitate the whole process, including the primary checks, collection of the needed documents, and verification process, and ensure everything is okay for you to get the loan.

Most of these loan agents fall under the DSA loan agent, a direct selling agent. These agents usually involve linking the lender and the customer to ensure the entire loan application and repayment process is done successfully. This role is like any agent job in the market; they receive payment as a percentage of the loan a client takes over their supervision.

Therefore, the primary role of these DSA loan agents is to ensure a professional relationship between the client and the lender. Also, the whole process of borrowing and paying the loan is done smoothly with the help of these agents. Most products and services the loan agent usually deals with include home, business, personal, bank, and many other loans.

Who is a personal loan agent?

Most financial institutions offer a product called a personal loan. These unsecured loans help clients meet their current financial needs. They are primarily loans given without collateral.

It can be an instant solution to emergency expenses, traveling, weddings, or other financial needs. Some organizations have specific employees who deal with this product specifically. 

Therefore, any person who works in a financial institution to ensure clients get personal loans is called a personal loan agent. Like the loan agent, they also facilitate the whole loan process, but the major difference is that they only deal with personal loan products.

Conclusion

In conclusion, the article discusses the differences between loan and personal loan agents. Though both deal with loan products, the major difference comes in the products they deal with. The loan agent mostly deals with many loan products, such as business loans, home loans, personal loans, and many others. However, the personal loan agent deals with the personal loan product only.

How to take out a personal loan – Important steps to follow

How to take out a personal loan – Important steps to follow

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A personal loan can be used for a range of purposes, from travel to home renovations to medical procedures.

Applying for finance can seem complicated but it is actually easier than ever to take out a personal loan. Here are some important steps to follow when applying for a personal loan.

Check your budget

Before you apply for a loan, it’s important to know that you can afford it. Figure out how much you need to borrow and if this is within your budget.

Once you know how big your loan amount is, you can use a loan calculator to work out your repayments over the loan period. They may be weekly, fortnightly or monthly, and once you see what your recurring repayments will be, you can choose the frequency that best fits within your budget and is maintainable on an ongoing basis for the duration of your loan term.

Put down as big a deposit as possible when taking out a loan. This will reduce the amount left to pay off, which can help lower your interest rate.

You need to be able to keep up with your repayments for the entire loan term. Consider if your situation changes which may impact your financial standing, such as losing your job, moving, or starting a family, and how this may impact your ability to pay off your loan.

Always make sure you can afford to pay off your personal loan, no holiday is worth putting yourself in a difficult financial situation.

Find the right option

There are various finance options and loan types, so you need to find the one that best suits your situation. Consider what you’re planning to use the loan for, if it’s to buy a new vehicle, you may be better off applying for a car loan, or if you’re looking to finance a new business venture, a business loan may be for you.

If you’re not sure if a personal loan is the best option, it’s a good idea to get advice from a finance specialist.

For personal loans, most lenders will offer unsecured loans and secured loans. Unsecured personal loans do not require an asset to be held as security for the loan, whereas secured loans do require an asset being held as security.

Check any additional fees and charges associated with your loan. This could include establishing fees, or charges for paying off your loan early, and may differ depending on the loan type and lender.

A loan calculator may help you decide if the loan is right for you. It can give you an idea of the costs involved and help you work out how long it will take you to pay off the loan. Loans terms are generally between 1- 7 years, and remember the shorter the loan term, the less interest you pay overall.

Don’t rush the process of researching and applying for a personal loan. Take time to find the best option for you.

Get the best rates

With many lenders and banks offering various loan options, shop around to make sure you get the best rates you can. Numerous factors can impact the rates you get, from the loan amount and terms to your personal situation.

Check your credit rate. A good credit score can help you get better rates on your loan, though keep in mind that every time you check your credit score it is impacted.

Some lenders may require you to have a good credit rating, but if you have a bad rating, there are still options for getting finance. If you have a bad credit score, you may have to pay higher interest rates, but you can look at the option of refinancing down the track once you’ve built up your credit rating.

Rates can also depend on the type of loan you choose. Talking with a finance specialist may help give you advice on what is best for you.

Applying for your loan

The application process for a personal loan can vary depending on the lender. You may be able to apply in person, over the phone or online.

You’ll need to be at least 18 years of age, and be an Australian citizen or permanent resident to apply for a personal loan.

Get the necessary documentation ready. You’ll need to provide proof of residence and a driver’s license. You’ll also need to show proof of regular income by providing recent payslips. This will show proof of your ability to pay back your loan.

Once your loan is approved, you will be sent final documents to sign, and then you should have access to your loan funds.

Making multiple loan applications to different lenders within a short period can negatively impact your credit rating. Carefully consider your options before applying to ensure you apply for one most suited to your needs and budget, and consider factors such as features and costs of loans, and your eligibility.

360 Finance make the process as quick as easy as possible, so you can get the loan you need when you need it. By comparing loans from over 30 lenders, we will help find the best rates for you. Whether you’re after a personal loan, car loan, business loan or another type of finance option, contact the team at 360 Finance.

Best money moves to skyrocket your chances of ICICI personal loan approval

Best money moves to skyrocket your chances of ICICI personal loan approval

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Personal loans are one of the most preferred and popular loan options for many decades. And with rising financial awareness amongst people coupled with steps being taken towards financial inclusion in the country, more & more people are becoming aware of the importance of personal loans in meeting financial needs for funds. Thus, personal loan offers of top banks such as ICICI personal loan are definitely amongst the favored loan option and lenders for those in need of quick funds for mitigating financial shortfalls or exigencies.

Here are top money moves that can help skyrocket your personal loan approval chances:

Review your credit profile to increase eligibility and approval chances

Credit score has gradually been becoming a vital parameter for lenders to assess applicant’s personal loan eligibility. A credit score is no less than a reflection of your creditworthiness as well as your past repayment history. Basis the information mentioned in the credit report, credit bureaus go-ahead to compute your credit score. Upon checking your credit score, you can take the necessary steps to better it and then go ahead to apply for an ICICI personal loan with a boosted credit profile to make sure you have higher chances of having the personal loan application accepted and even avail low and attractive ICICI Personal Loan Interest Rates.

And, developing the habit of time to time reviewing your credit report at regular intervals of around once every three months is equally important. This habit allows you enough time period to make corrective efforts to boost your credit score before you choose to submit an application for ICICI personal loan. How this helps is it enables you to n=identify and get rectification for any wrong information which has been harming and adversely impacting your credit score. By quickly contacting the bureau and/or lender for such corrections, in return, you get a rectified credit report, which will reflect an increase in your credit score. Also, remember to compare the rates of lenders offering you a personal loan with those of ICICI Personal Loan Interest Rates, and then go ahead with the lender offering the best deal as per your requirement.

Ensure to qualify for the minimum income eligibility criterion

Many lenders set minimum income criteria for loan applicants when evaluating their applications. Income is often the first filter that lenders put in when an applicant applies for ICICI personal loan. These income criteria may also vary as per the applicant’s location. For a person living in metro areas, the minimum income requirement might be more than that required for someone residing in rural or semi-urban areas. Those who do not meet this criterion usually face outright rejection of an application.

Also, do not ignore the age factor in eligibility when planning for ICICI Personal Loan. Check whether your current age fits the criterion set by prospective lenders. And not only the current age, but lenders may also factor in the applicant’s expected age at the end of personal loan tenure while assessing loan eligibility. Applicants who fail to qualify into the minimum and maximum age bracket are usually denied a loan.

Check the offers of your existing lenders

Lots of personal loan lenders in recent times tend to offer pre-approved personal loans at preferential ICICI Personal Loan Interest Rates to their existing and/or even highly prospective customers. The presence of existing relationships in varying forms like current, savings, salary or fixed/recurring deposit accounts, or existing loans or credit cards, can thus fetch you better deals on your loan or other credit requirements. Hence, those looking for ICICI personal loan should first start their process of finalizing the lender by contacting the ICICI bank and/or other banks and NBFCs with whom they share existing banking and/or lending relationship. Personal Loan Interest Rates and other loan features can then be used as a benchmark to compare the competitive rates and offers of other lenders.

Be wise when finalizing loan tenure

When applying for ICICI Personal Loan, remember that most lenders factor in applicant’s repayment capacity while evaluating their loan applications. The requirement in terms of eligibility here is that the applicant’s monthly EMI obligations (including new EMI) should be as per the eligibility set by different lenders. Therefore, applicants should ensure to choose the personal loan tenure that keeps their monthly repayment obligations within the stipulated range. Keep in mind that applicants already having higher repayment obligations can have lower chances of getting their personal loan application approved with favourable service terms.

Compare offers and features of as many lenders as possible

Given that many lenders such as ICICI Personal Loan offer a wide range of offers and products pertaining to personal loans, their interest rates tend to a wide range, making it imperative for prospective borrowers to compare the personal loans offered by as many lenders as possible before selecting any. Hence, start your loan search by contacting the fintech, bank, and/or NBFCs with whom they have existing consumer relationships for their personal loan features. Do not restrict your lender comparison to just the rates of top lenders like ICICI Personal Loan Interest rates, but factor in other features, including repayment tenure, processing fees, loan amount, etc.

Only borrow the required amount as a loan

Another step that can turn into a grave financial blunder is borrowing more than the actual requirement of funds. This is true especially for those having higher repayment capacity, as they are the ones who get enticed to avail a larger amount of personal loan upon knowing their high loan eligibility. These people tend to forget that availing loans, especially relatively costlier ones like personal loans, involve interest cost just like the one levied in the form of ICICI Personal loan interest rates, which needs to be paid back with the principal borrowed. The higher amount you borrow, especially more than the actual requirements, the more additional interest cost you incur, thereby taking away a higher amount of money from your pocket. Over-borrowing can even push you towards deeply straining your financial health to repay the borrowed loan, thus causing a possible threat of increasing the risk of default. Hence, when taking ICICI Personal Loan, ensure to borrow only the amount you require and would be able to repay comfortably in the form of monthly personal loan EMIs.