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How to Track Personal Loan Application Status Online?
Personal Loans are the best funding options for people who nee . . .
15 Mar, 2023
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Loans are of two different categories, namely, secured loans and unsecured loans. Personal Loans fall in the category of unsecured loans. It is important to understand the difference between the two loan terms, so as to choose the best viable option as a borrower, which could impact your long-term financial health.
A secured loan is granted to borrowers on the basis of some form of collateral, while an unsecured loan, including personal loans, implies a collateral-free loan. This basic difference in the two types of loans impacts the rate of interest, borrowing limit, and terms of repayment of such loans.
Secured loans with a higher amount are given a longer period to repay whereas short-term loans are cleared in a couple of years. Both types of personal loans have their own benefits for different borrowers. Decide which loan types suit your financial requirement and apply for a secured or unsecured loan accordingly.
A secured loan pertains to loan granted by financial institutions against an asset which is used as a security or collateral towards the loan. For instance, the financial institution will hold the ownership/title deed of your house, stocks etc. as security; for availing loan corresponding to the value of the asset, till the loan is repaid fully. They are the most popular method for borrowing huge sum of money. With borrower’s pledged asset against loan availed, financial institutions are assured of the timely repayment of the loans granted. In case of default by the borrower, the lender can sell the security granted against the loan to pay off the loan, thus mitigating the risk of default.
- Secured long-term loans are better off in giving a considerable interest rate
- Borrowers opting for secured loans get a higher loan amount and an extended repayment period of more the 5 years to make the repayment
- Scheduled repayment of long-term loans can improve the credit score and benefit future loan approvals
- Interest rate charged for secured loans is affordable and not very high as incurred in taking unsecured loans
- Mortgaged property or asset given as a collateral can be at risk if the secured loans are not paid on time
- Secured loans are often stress-full as EMIs to be paid are higher because of the excess loan amount taken
- Flow of monthly expenses can be hampered in repayment of heavy EMIs
Unsecured loan relates to a loan that is granted without the need for borrowers to pledge any asset like gold, house etc. i.e., it is a collateral free loan. Compared to a secured loan, unsecured loans carry more risk for a financial institution granting the loan, so they have a higher rate of interest.
- Unsecured loans are short-term loans and so less risky for the lenders in terms of receiving the repayment
- Borrowers have no hassles of mortgaging any asset or presenting a guarantor to avail unsecured loans
- Short-term loans are ideal for emergency situations as they can be taken instantly via personal loan apps
- Lenders charge a penalty amount in case the short-term loan is cleared before the tenure
- Many unsecured loans are attached with a processing cost that is charged above the interest rate
- Credit score gets affected when short-term loan EMIs are not paid on time
A type of secured loan where your home forms the base to borrow money in bulk. The loan amount given on home equity loans depends upon the market value of your property.
This is a long-term secured loan that you can use to fulfil your dream of owning an amazing, brand-new bike or a car. Vehicle loans can be applied to buy new personal vehicles, commercial vehicles, or own used vehicles at a low cost.
Mortgaging gold to raise a higher loan amount is also a type of secured loan. This can be used in times of an emergency financial crisis.
Educational loan is an unsecured and collateral-free loan that does not require any kind of security against the loan amount. Instant loan apps give 24/7 access whether you are travelling, in office, or at home. Female students applying for education loans get discounts on the rate of interest.
A home renovation loan is a type of short-term personal loan that can be used for repainting the walls, changing the floor, or replacing the furniture. Any pending repairs in your house can also be fixed via a home renovation loan.
It is an emergency loan that is required to generate health finances involving expensive medications, therapies, and surgery if required. You can’t waste time to collecting funds when medical treatment is required urgently. Hence, opt for a medical loan on priority when it is about saving a life.
Personal loans are a popular kind of unsecured loans, which are provided by financial institutions for meeting their urgent financial requirements. Personal loans can be availed for various reasons like education, marriage, health, travel etc. Personal loans are granted after verifying the credit history and income status of the individuals to evaluate the past credit history and potential repaying capacity of the borrower.
EMI calculator is one upgraded technology that gives borrowers the clarity about their monthly instalments. Unsecured loan EMI calculator facilitates calculations of monthly instalments in minutes, with accurate results. Once a suitable EMI amount is derived, faster decision can be taken for a secured or unsecured loan application and disbursal. Calculate EMIs for secured and unsecured personal loan up to 1.5 lakh with the HeroFinCorp app. It depends on three variables - loan amount, tenure and interest rate. Borrowers can try different combinations till a suitable EMI is derived.
So, which is better secured loan or unsecured personal loan?
That would depend on the purpose for which a borrower is taking the loan.
If it is for a specific purpose and borrower has assets to pledge against the loan, then he can opt for a secured loan. Otherwise, can opt for unsecured personal loans.
Hero FinCorp Instant Personal Loan App is one such user-friendly and fully digitized online personal loan app, which can be downloaded through Google Play Store. Here, you can get instant personal loans starting from Rs.15,000 up to a maximum limit of Rs.1,50,000 in just a few clicks.
A: Thanks to the KYC documents such as Aadhar Card and PAN card, the list of mandatory documents for secured loan application has been reduced. Besides personal identity documents, a secured loan demands 6 months of a bank statement or recent bank transactions, salary slips for salaried individuals, and other important documents that may vary from lender to lender.
A: Yes, you can apply for an unsecured loan online via instant personal loan apps like HeroFinCorp. It is easily downloadable via Google Play Store and involves all the loan processing on a digital platform, inclusive of paperless documentation.
A: It entirely depends upon the purpose and amount of loan you require to meet the financial shortage. You know it better whether a short-term loan of unsecured nature will fill the financial gap or a long-term secured loan will be a good choice.
A: A secured loan is a long-term loan that involves at least a week’s time for loan processing. This is because the loan amount taken is higher so the verification process takes time to verify the proof of income, collateral submitted, and credit report.
A: If the financial need requires a large amount, then a secured loan is preferable. Unsecured loans will not be able to provide the right financial assistance for very high loan amounts.
A: Use the interest rate calculator to easily calculate the interest in no time or go the manual way using the below simple interest formula:
Principal Loan Amount X Interest Rate X Total Number of Years = Interest
INR 2,00,000 x 5% x 5 = 50,000 is the interest for 5 years
A: The current interest rate on both secured and unsecured personal loans can be checked online on credit websites. The percentage of interest prevailing in the market according to different lenders is listed on the financial websites and open for comparison.
The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.
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