Back in the day when the concept of loans first began, borrowers would have to hand over some of their prized valuables (assets) to the lender as a form of security against the loan they want to take. This is known as providing collateral for a secured loan, and borrowers would have to provide collateral equivalent to in value to the loan amount they wanted to borrow.
Holding on to the borrower’s possessions until they pay back the loan in entirety protects the lender, in case the borrower could not repay the loan. Secured loans are still very common today. However, many people who want to take out a loan cannot do so because they don’t have enough collateral to pledge; or, they’re not willing to provide collateral against a loan.
This is why unsecured loans are an excellent option. Unsecured loans are provided without the need of pledging collateral to the lender. The interest rates for unsecured loans tend to be a bit higher than that of secured loans. However, they save the borrower the trouble from arranging a sufficient amount of collateral against the loan.
Additionally, unsecured loans are quite easy to avail, since new-age lenders such as Upwards have completely digitalized loan application procedures. If you’re interested in applying for an unsecured loan, let’s take a look at the features and benefits of the same.
Features & Benefits of Unsecured Personal Loans
1# No collateral required: As mentioned, you need no collateral in order to get your unsecured loan. All you need to do is submit your personal details to the lender, who will assess your application based on your personal details such as income, CIBIL score, etc.
2# Minimal documents: Banks require numerous documents for the application process. For unsecured loans from digital lenders, you only need a few easily available KYC documents for submitting your application.
3# Fast processing: Unlike bank loans- which can take several weeks just to review your application, and another few weeks to disburse your loan – unsecured personal loan lenders have super-fast processing. You can apply for a loan and get funds directly to your bank account, in as little as 24 hours!
4# Digital process: No one likes having to fill out lengthy, tedious paperwork! One can get an unsecured loan from the comfort of their own home, simply by applying online.
5# Variety of use cases: You can take a personal loan for any requirement under the sun. Be it for home repairs, purchasing a vehicle, upgrading your mobile phone, unsecured loans are there to help fund it! They’re especially great for emergency situations such as paying medical expenses or high utility bills.
Eligibility for Unsecured Personal Loans
Both secured and unsecured loans have an eligibility criteria, which is basically a set of parameters that determine whether you can apply for a loan from a particular lender.
A great thing about eligibility for unsecured loans is that the criteria are much more inclusive than it was many decades ago. This is because digital lenders such as Upwards aim to empower the masses who require access to loans, but are unable to avail them from traditional lenders such as banks. Therefore, you can avail a personal loan, even if you earn just Rs. 15,000 a month and have no credit history!
Below is a list of common eligibility parameters for unsecured personal loans:
1# Age: Individuals ages 21-55 can easily be eligible for a personal loan.
2# Monthly Income: With most lenders, you can apply for a personal loan on a salary as low as Rs. 15,000 per month.
3# CIBIL score: While banks require a minimum CIBIL of 750 and above, lenders are willing to accept CIBIL scores as low as 625 and higher. For new-to-credit borrowers having no CIBIL score, the borrower’s other criteria such as income and employment details are considered instead.
4# Location: Lenders these days can serve a wide variety of locations across India. It’s still a good idea to check if the lender does indeed provide personal loans in your city.
5#Employment history: Lenders will check how long you have been working for, as well as the duration of your employment tenure with your current company.
If you still aren’t sure whether you’re eligible for a loan, just use our personal loan eligibility calculator to give you a quick and an instant answer! Simply enter your details, and let the eligibility calculator do the work!