Personal Loan is a loan which is borrowed on personal lines of the individual borrower and the borrower receives a lump sum amount of money at the start of the loan. There is no restriction on the money received and the borrower is free to do whatever he wishes to do with the amount received. Personal loan is an unsecured loan meaning that there is no collateral or asset underlying as a security for the loan borrowed.
Uses of Personal loan
There are no restrictions on the usage of personal loans. It can be used for any purpose deemed good by the borrower. Mostly personal loans are used to settle credit card liabilities, for marriage expenses, for a foreign tour and whatever the borrower wants to do.
How to get qualified for a personal loan?
In the UAE(United Arab Emirates), banks strictly lend personal loans to the individuals who are salaried working on a list of approved companies. The minimum salary requirement to be eligible for a personal loan in UAE is AED 5,000 in most of the banks. However, this rule changes from bank to bank. The debt to income ratio will be maximum 50%. These rules are laid down by UAE Central Bank to regulate the banks. These are just basic requirements. The bank might have its own credit policies while lending Personal Loans.
Interest rate on personal loan
Interest rates on personal loans are higher since they are unsecured. In the UAE, the interest rates on personal loans can range from 8% to 49%. Hence, be careful before applying for a personal loan. Study all the terms and conditions of the loan.
How to apply for a personal loan?
Banks have their dedicated teams to cater to the lucrative personal loan business. Bank websites also could help. However, do not always listen to what the sales representative says. Online sites such as www.imudir.com, help you making informed decision before applying for a personal loan or any other financial product. Since, you can apply directly to various banks through www.imudir.com, you may land in a better deal by studying the terms beforehand. Getting a second opinion really matters.
Are personal loans good?
If you look at personal loans from the perspective of interest rates, they look to be bad. But personal loans can be really helpful in times of urgent requirement of funds. Such a situation might arise from medical bills, education and so on. It is a matter of judgment after all. Beware of the flat interest rates that mislead the consumers. Probe with the bank whether the inteterst charged is on reducing balance or flat interest rate.
Personal loans when used properly can be a boon and in other cases it may turn out to be a bane. So be careful.