The personal loan has got scope to transform the lives of many as the borrower can utilize the funds for any purpose of their choice for the personal loans being taken. Personal loans can be utilized for medical purposes, marriage purposes, travel purposes, home renovation, and many other purposes. The disbursement of personal loans has grown rapidly even in the Covid times as people need the money to carry out the expenses for the major expense purpose. Many people must have taken benefit for the medical expenses as well during the Covid times. Thus there is a major growth seen in the disbursement of the personal loans seen even during the pandemic. Many people amongst the salaried class avail personal loans to let their ends meet during major expenses required. The major target segment amongst the personal loans is people with lower or average income groups or people who have recently joined the work. These categories of people have lower savings and thus need borrowing funds from the banks or NBFC’s to let their ends meet. The Indian personal loans market is expected to grow at 10% annual basis.
There are multiple banks & NBFC’s which disburse the loans to the borrowers. The loans can be disbursed at interest rates of 9% onwards up to 24% interest rates. Some lenders may even charge loans at an even higher percentage than 24% to the borrowers. The market potential for personal loans in India is over 5 lakh crores. During Covid times, the market is affected as the recoveries have gone down, and bad debts have increased. But the disbursement is at a steady pace as people or in need of funds. Due to salary cuts or the requirement of emergency medical expenses, the demand for money in the markets has increased. The chances of bad debts are very high in personal loans as the maximum loans are opted by the people from the lower strata of the society with low or moderate income. Due to Covid, the requirement of personal loans has increased from unwanted expenses like purchase of white good or travel purpose or home renovation to the basic & must necessity-based expenses like marriage purpose, to child’s education or else for medical use. Due to lower income amongst the salaried class, which has reduced even more sharply, the bad debts have increased.
Following are the features for personal loans with great potential:
- Quick disbursement of loans:
The borrower can avail of quick and easy loans from the bank or NBFC within 48 hours the loans are approved and within few hours if the online application for a personal loan is given. The quick disbursal of loans has made it ideal for financial or medical needs.
- Easy loan amount up to Rs.25 lakh:
The maximum liability up to which the loans can be availed is Rs.25 lakh. However, the actual eligibility of the loan approvals depends upon the salary of the applicant & also the credit score of the applicant. Thus the limit made available for availing personal loans is sufficiently high.
- Flexible payback period:
The borrower can decide the payback period according to their suitability. The payback period tenure is a minimum of 1 year and five years for the personal loans.
- No collateral required:
The borrower does not need to keep any mortgage with the lender for availing of loans. Personal loans are of smaller value and are amongst the unsecured loans. Thus the loans are collateral-free.
- Un-restricted end use:
The usage of the funds obtained from personal loans is un-restricted. The borrower is free to make use of funds according to their need and requirement. There is no interference of the bank related to the usage of funds.
- Minimum documents required:
The documents required are very few. As the amount which needs to be disbursed for the personal loans is short, the quick disbursal is possible with minimum documentation.
- Competitive rates of personal loans:
The loans can be availed at competitive rates from the lenders. The banks or NBFC’s which charge minimal interest rates can be surveyed over the internet, and accordingly, the loans can be availed. The competition amongst the banks & NBFC’s is fiercely competitive; thus, the borrower can take advantage of that and can avail of loans at minimal interest rates.
Conclusion:
Thus the uniqueness for the personal loans is that the disbursement of the loans is quick and easy. And the funds can be utilized for any purpose according to the choice of the borrower. Thus for multiple usages, personal loans can be availed. This is the hidden potential for personal loans.