How Do You Get a Personal Loan Without Security?

The benefit of a personal loan without security is that you don’t need to risk any of your assets. In the case of default, the lender might take legal action to recover your money. However, this will not affect your personal property at all.

Moreover, a personal loan without security is beneficial for people who have certain financial goals, but don’t have the appropriate assets to fulfil them. For instance, if a person wants to start a business but does not have the required collateral to pledge, it would be difficult for them to start their business. This is when a personal loan comes to the rescue!

1] Personal Loan Without Security: Things To Know

• It is important to know that a personal loan without security has higher interest rates compared to loans with security. This is because there is a high risk involved when there is no security. Hence, the interest component is more to cover the cost of the loan undertaken by the lender.
• Since personal loans are often availed without security, it is essential to have a stable primary income as well as a good cash flow report. This helps build the lender’s confidence to loan the money to the borrower and verify his ability to pay back the loan.
• It is also important to know that unsecured personal loans are the riskier call for a good credit score.
• Additionally, a clean history is also important,unlike in the case of loans with security.

Thus, the decision to take a personal loan without or with security is based on your financial situation.

2] Eligibility criteria for a personal loan without security

To qualify for personal loans without security, certain aspects are considered, such as:

• Credit Rating/Score
• Credit Worthiness

Usually, the applicant’s credit score is assessed. The credit scores determine the creditworthiness of the applicant. A desirable credit score for a personal loan is seven hundred and fifty or above.

A good credit rating and history represent that the applicant is responsible for repaying the loan or credit without any trouble or delay.

When an applicant has a steady history of loan/ credit repayments and a high credit rating worthiness, the chances of them getting a personal loan are much higher. This is because most banks or financial institutions judge your ability to repay the loans by your credit or CIBIL score. Hence, maintaining a good CIBIL score (over 750) helps you avail loans without consuming much time and get the desired terms for repayment.

It is also important to note that you must present verified KYC documents like the aadhar card, passport, driving license, etc. Since personal loans are unsecured loans, the interest rate charged is a little bit higher than secured loans, but if you have a decent credit history, that will not be a big problem. Always pay your dues or EMI on time because if you default on these payments, your CIBIL score might suffer a dent in the process.

Apart from credit qualifications, this is a general list of eligibility criteria for how to get a loan from a bank without security:

• The applicant must be an Indian citizen.
• The applicant’s desirable age must be between 20to 60
• The applicant must be either employed in a private or public sector or be self-employed.

In cases of availing a personal loan from bank, it helps when the applicant has an existing long relationship with the bank. Existing clients have higher chances of getting their loan applications quickly approved by their respective banks because of their long-standing relationship.

3] Documents required for a personal loan without security

To avail a personal loan from a bank, the applicant can either visit the bank and fill out the application or also look if their banks have the option to apply for a personal loan on their official websites.

Following is a general list of documents that must be submitted to banks to get a personal loan:

• Proof of applicant’s age
• Address proof
• Proof of Identity
• Passport-size pictures of the applicant
• A duly filled loan application
• Proof of income: like salary slips

Also Read: How do you get a Personal Loan without a Pan Card?

4] How can you apply for a personal loan without security?

It is very much possible to apply for a personal loan without security. It can be done via the online lending portal of financial institutions by filling out the application, wherein the applicant has to follow the following steps:

• The applicant has to download the lender’s application or visit their website from their mobile phone or a desktop. It is advised that you use a desktop for filling out the application as the mobile screens are a little smaller,which may cause you to miss out on important details.
• In the next step, the applicant has to log in and fill out the loan application. This generally includes the personal details of the applicant along with loan
• Next, the applicant has to submit their KYC documents like the Aadhaar card, PAN card, passport, or driving license

Once the loan is approved, the amount is directly transferred to the borrower’s bank account.

If the process is to be summed up, it consists of:

• Determining the loan amount: Determine the loan amount you need. Specify why you are applying for a loan. It can be to fund a wedding, medical expenses, travel, or purchasing an item.
• Verifying their eligibility: Filling a loan application without verifying the eligibility criteria will lead to rejection and negatively impact your credit or CIBIL score.
• Collecting their documents: Whether you are applying for an online personal loan or some other kind of loan, it is necessary to collect all the documents in the required format and verify them before uploading.
• Calculating the EMI: Before taking a loan, make sure to calculate the EMI using the EMI calculator to determine the monthly instalment. It is a free tool that borrowers can use whenever they like to calculate their EMI and loan tenure.
• Filling out your application: It is very important to fill out your loan application accurately to make the assessment process thorough and swift.
• Submitting your loan application: You will get a tracking number once you submit your application. Make sure to keep that number as you might need it in the future to track your application process.
• Waiting for confirmation: Once the lending institution has approved the personal loan, the borrower gets a message regarding the same. After the borrower accepts the message, the money is disbursed to the borrower’s account.

Also Read: How Do You Get a Personal Loan Without Bank Statements?

Conclusion

A personal loan is a type of unsecured loan which requires no security. Hence, you can get a personal loan approved without risking any of your assets as collateral. Having a good CIBIL or credit score certainly helps in the process, and you have the negotiation authority to get favourable terms for repayment of the loan.

While a personal loan is essential for several financial reasons, it is also important to stick to your repayment timelines for it helps in case you need to take another loan in the future.

Reading this blog will help you through the basics of availing a personal loan without security. However, it is also important to consult with a financial advisor or your bank to sort out certain particulars and obtain thorough clarity before you proceed with the application.