Being a lifeline for a number of people who are looking for funds for several purposes such as education, home renovations, medical emergencies or even vacation, a personal loan without security is extremely appealing as it doesn’t require any collateral.
An instant personal loan without security is one that different banks provide to fund the financial need or cash requirement of any individual, be it for any legal and valid purpose. The bank has no right to question you about the purpose of your personal loan when you’re applying for one. However, one of the biggest advantages, as already mentioned before, is the non-requirement of any security deposit such as property, shares, or gold.
For any person in India, their worthiness and credit ranking are the ones that determine their eligibility when it comes to an instant personal loan without security from any certified bank in this country.
If you’re a long-standing customer of the bank or have a high creditworthiness and disciplined repayment history, then you’re very likely to receive a personal loan without collateral security on favourable terms. Here we will know more about what no security personal loans are and how they work.
What is a Personal Loan Without Security?
A personal loan without security, also known as an unsecured personal loan, is a kind of loan that doesn’t require the borrower to offer any collateral security as such. In other words, it is simply lending without wanting any collateral security such as property papers, gold, and so on.
A collateral is an asset like a car or a house that the lender can take in case the borrower fails to repay the loan. However, when it comes to a personal loan without a security deposit, the lender solely relies on the credit history, the CIBIL score, and the ability to repay the loan of the borrower.
How Does a Personal Loan Without Security Work?
Personal loans are something that is granted on the basis of the creditworthiness of the borrower instead of the presence of any collateral security. Lenders tend to assess and analyse factors such as credit history, debt-to-income ratio, and income stability in order to gauge the ability of the borrower to repay the loan. This complete focus on creditworthiness enables lenders to manage risk without security deposits when it comes to a personal loan without security.
By not wanting any collateral security, an instant personal loan without security becomes much more accessible to a wider range of individuals. This loan seeks to promote financial access and inclusion for a larger and more diverse population. Moreover, such a loan also makes the application process much more seamless for both the lender and the borrower.
Benefits of Personal Loans Without Security
- Simple application process- Individuals can seek to get unsecured loans quickly without any hassle. This is because, without personal loans, there are not many documents that need to be checked before accepting the loan amount as there are not any collateral securities involved.
- Minimal documentation- A personal or unsecured loan can be easily obtained with the submission of only a few documents. These are typically the documents that you’d need in order to apply for an instant personal loan without security- Your KYC documents such as Aadhaar/PAN card/passport/Voter ID card, your employee ID card, salary slips of the last 3 months, and bank account statements of the previous 3 months.
- Flexible tenures- Most unsecured personal loans are known for their flexibility repayment tenures, making them a great choice whenever you need some emergency cash but don’t have any collateral security as such. This is ideal for those who are looking to enjoy some flexibility in their repayment capacity.
- Quick disbursal- There are quite a few unsecured personal loans that get disbursed within 24 hours of approval, and are renowned for their speed of loan processing. This makes them the ideal option when it comes to funding unplanned and immediate expenses without breaking your savings.
Requirements to Get a Personal Loan Without Security
Here are the key factors that determine the eligibility for an instant personal loan without security:
- A higher credit score.
- An applicant with a stable and sufficient income.
- A consistent employee record.
- A better debt-to-income ratio showcases your ability to manage existing debts.
- Providing accurate and verified details.
- Maintaining a healthy financial profile.
- Your creditworthiness can also impact the terms of your loan.
- A track record of responsible financial behaviour.
- A reliable history of repaying debts on time.
- An automated process for rapid assessment of your overall eligibility.
Apart from all these, you’re required to be an Indian, and your age should be anywhere from 21 to 80 years old. You should be working at an MNC, private or public company, and have a CIBIL score higher than 684.
The Application Process for Personal Loans Without Security
You can a personal loan without security by following these simple steps:
- Visit the website of your chosen bank or financial institution.
- Follow the prompts and visit the personal loan online application form.
- Provide every necessary personal, professional and financial information.
- Choose the loan amount and repayment tenure very carefully.
- Finally, submit all the essential documents for verification and approval.
Risks of Taking a Personal Loan Without Security
Some of the main risks associated with taking a personal loan without security are as follows:
- Unstable interest rate
- Early payoff penalties
- Big fees upfront
- The insurance pitch
- Privacy concerns
- Precomputed interest
- Unnecessary complications
- Payday loans
Conclusion
A personal loan without security is basically a fund that’s being lent to you by a bank or any other certified financial institution without the need for any collateral security such as property papers, gold, and so on. You can use it for a variety of purposes and don’t need to have any security deposit against whatever you’re borrowing. However, there are certain risks associated with this loan, and various hidden charges that you need to be aware of before you go for an unsecured personal loan.
Frequently Asked Questions
Can I apply for a personal loan without security online?
Yes, you can apply for a personal loan without security online by visiting the website of your chosen bank or financial institution and following the already present prompts.
How long does it take to get approved for a personal loan without security?
The time taken to get approval for a personal loan without security can range from a few hours to a few weeks, and this time depends on the lender, your credit score, and the completeness of your application.
Are there any hidden fees with a personal loan without security?
Yes, personal loans without security can have hidden charges such as late payment penalties, processing fees, insurance charges, loan cancellation charges, and prepayment charges.
Can I use a personal loan without security for any purpose?
You can make use of the funds from an unsecured personal loan for various purposes such as education expenses, medical emergencies, home repairs, or other valid needs.