If you have previously at any time researched personal loans in India, one term you must be familiar with is a collateral-free personal loan. But what does it actually mean?
While the concept of a personal loan is not new in India, the various intricacies of this financial instrument are not particularly clear to the Indian populace, and one among them is the term collateral-free.
Thus, in today’s article, we will try to understand what exactly is a collateral-free personal loan and the various advantages one entails in India.
Without further ado, let’s get started.
What Is a Collateral-Free Personal Loan?
One of the first and most important aspects we need to understand is the exact meaning of the term collateral-free loan. In simple terminology, a collateral-free loan can be understood as a financial lending instrument through which you can borrow a certain amount of funds from the lender without having to pledge an asset or collateral. Also known as an unsecured loan, these terms are used synonymously to identify most personal loan offerings in India.
At its essence, most personal loans in the motherland are unsecured in nature, and thus it allows the borrower to access funds as and when required without having to pledge collateral or assets of equal or more value.
Advantages of Collateral-Free Personal Loans
Personal loans in India generally arrive with a multitude of advantages; however, a collateral-free one has some additional advantages which a secured personal loan cannot boast of. Some of the most significant of them are as mentioned below.
- Instant Approval
One common hassle with secured personal loans continues to be the fact that the lender needs to spend an additional amount of time and resources to verify the legitimacy of your assets, which essentially translates into a longer wait time for you. On the other hand, since in a collateral-free loan, all the lender needs to check is your credit history, the assessment and subsequent approval process is instant, ensuring that you have access to the funds when you need them and not at a later stage.
Along with this, most modern lenders in India make use of advanced fintech technology, which equips them with the capability to instantaneously access the credit history of borrowers and make use of advanced AI and ML algorithms to assess your creditworthiness thus further increasing the speed of approval and loan disbursement.
- Competitive Rates of Interest
As the personal loan industry in India continues to mature, there is a steady rise in the demand for collateral-free personal loans, which has made it easier for lenders to offer competitive rates of interest to borrowers. For instance, MoneyView, which is a leading lender based out of Bengaluru, offers a rate of interest starting from 1.13% a month, making it possible for every borrower to access a personal loan to meet their needs.
- 100% Online and Paperless Process
When compared to a secured loan or a traditional loan where you need to physically visit the lender’s premises and submit your loan application along with documentation of the collateral you are willing to pledge, a collateral-free personal loan arrives with a completely online and 100% paperless process.
Essentially, this offering translates into the fact that you can complete the entire loan process from start to finish right at the comfort of your home. No need to wait in long queues or submit paperwork; everything in the application process, right from populating the requested information to securely uploading your documents onto the server of the lender, can be done from anywhere, making it possible for anyone to access a personal loan at a time of need.
- Freedom to Spend
Last but not least, in a collateral-free personal loan, the lender allows you the opportunity to spend the loan amount in any area of your choice without needing to inform them beforehand. As compared to a traditional loan, wherein you have an inherent limitation on the spending avenue, such as in-home loans and vehicle loans, you have the complete liberty of using the personal loan amount to meet your any or all needs, right from a medical emergency to paying the down payment of your first two-wheeler.
How to Apply For a Collateral-Free Personal Loan?
These days applying for a collateral-free personal loan has become easier than ever before. All you need to do is follow the steps outlined below, and you will have the money in your account in no time.
- Open the internet browser on your device and search for collateral-free personal loans.
- You will see a multitude of offers from different lenders. Check out each of them and be especially mindful of the tenure they are offering, along with the rate of interest being charged.
- Once you are satisfied with the initial proposition, either navigate to the official website of the lender or download their mobile application.
- Initiate the application process by sharing your Aadhar linked mobile number and email address.
- In the next step, input your complete name, residential and permanent address, eKYC details such as Aadhar Card number and PAN card.
- Navigate to the next screen and input your income information, including your employment type such as salaried or self-employed, monthly in-hand income, employer name, years of experience etc.
- In the final step, upload all the necessary documents such as income certificate, salary slip, bank statement and any other document requested by the lender. Submit the application, and in a short while, you will be updated on your eligibility.
- Once approved, choose the loan amount you require, and you will have the money in your account in less than 48 business hours.
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Conclusion
Taking a collateral-free personal loan in India arrives with several advantages right from instant approval and disbursement to a completely online application process, and with so many established lenders now offering this service, it is easier than ever before to apply for one. So go ahead and apply for a collateral-free personal loan today.