Are you planning for a destination wedding? Or taking that long overdue vacation? Or revamping your house into your dream home?
Do not let finances stop in realising your dreams. HDFC Bank offers you Unsecured Loans to live your dream without burdening you with heavy financial debts.
Read on to know more about this loan, its types, and its benefits in detail.
What are Unsecured Loans?
An Unsecured Loan is a loan that does not require you to provide any collateral to avail them. It is issued to you by the lender on your creditworthiness as a borrower. And hence, having an excellent credit score is a prerequisite for the approval of an Unsecured Loan.
Collateral/s act as a form of security for the lender, and hence, it plays a crucial part in the loan approval process.
Generally, this loan is offered at a higher interest rate in comparison to secured loans.
What are thetypes of Unsecured Loans?
Revolving Loan
A Revolving Loan is a type of credit that works on the cycle of spending, repaying, and spending again. A maximum credit limit is set by the bank beforehand. You can choose to utilise the credit limit entirely or in parts as per your requirement. Once you have repaid your credit dues, the credit limit restores. This means that you can use the credit limit provided multiple times.
Term Loan
Opting for a Term Loan is a great way to make funds available when you need a lump sum amount of money. This loan is generally offered at a fixed interest rate. You can repay the loan in equal instalments at regular intervals for a fixed period. The loan comes in handy to make purchases of fixed assets that require a large sum of money.
Consolidate Loan
During financial hardships, your debts may get accumulated excessively. This can put you in a fix for keeping up with the payments, especially with the rising interest. This is when having a consolidate loan can be of utmost help. With this loan, you can clear your accumulated debt and relieve your repayment cycle considerably.
What are the benefits of Unsecured Loans?
Quick application process- The application process of Unsecured Personal Loans does not require excessive paperwork. You need to have proper financial documents and a good credit score while applying for this loan.
Collateral free– Unsecured Loan do not require any collateral while applying for it.
Option to disburse smaller loan amounts– HDFC Bank offers Unsecured Loans for smaller amounts. Furthermore, the bank also makes repayment easier for you by providing a flexible Equated Monthly Instalments (EMIs) option.
Hope this article has helped you to have a better understanding of Unsecured Loan and the entailed benefits. Maintaining a good credit score is the key to applying for this loan.
One of the most popular unsecured loans in the industry, is the Personal Loan. You can visit the nearest HDFC Bank branch or contact your relationship manager to get more details about this loan. Start your financial journey with HDFC Bank today.
Apply for an HDFC Bank Personal Loan by clicking here.
Need a loan immediately? Here’s how you can get a loan quickly and easily!
*Terms and conditions apply. HDFC Bank Personal Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circ*mstances.
FAQs
In an unsecured loan, a lender provides money to a borrower without any legal claim to the borrower's assets in case of default. This means the lender has to depend solely on the borrower's financial capacity and creditworthiness for repayment.
What are the requirements for an unsecured loan? ›
Qualifications for an unsecured loan
Generally, they look for a history of responsible credit use (typically one or more years), on-time payments, low credit card balances and a mix of account types. They'll also check your credit scores, which are calculated based on the information in your credit reports.
What are the benefits of an unsecured loan? ›
The main advantages of an unsecured loan include:
- You don't have to leverage any of your assets to secure funds.
- Your loan approval may be completed faster because there are no assets to evaluate.
- Unsecured loans may be a better option for borrowing smaller amounts.
Student loans, personal loans and credit cards are all example of unsecured loans.
What are examples of unsecured loans? ›
Unsecured loans include personal loans, student loans, and most credit cards—all of which can be revolving or term loans. A revolving loan is a loan that has a credit limit that can be spent, repaid, and spent again. Examples of revolving unsecured loans include credit cards and personal lines of credit.
How much can you borrow on an unsecured loan? ›
Unsecured loans are typically for smaller amounts, usually between £1,000-£25,000, whereas a secured loan can be for up to £100,000 or more. Another feature of an unsecured loan is that lenders usually set out fixed payment plans so you know exactly what you'll be paying every month.
What is a good credit score for unsecured loan? ›
To qualify for a personal loan, borrowers generally need a minimum credit score of at least 580 — though certain lenders have even lower requirements than that. However, your chances of getting a low interest personal loan rate are much higher if you have a “very good” or “excellent” credit score of 740 and above.
What is the highest amount for an unsecured loan? ›
Unsecured loans typically range from $1,000 to $100,000, which you can use for a range of purposes. In general, annual percentage rates (APRs) range from about 6% to 36%, and loan terms often extend from two to seven years.
How to get a loan when no one will approve you? ›
Getting a personal loan with a co-signer that has a strong credit score and a solid income can boost your application. Your co-signer – ideally, a family member or close friend – will apply alongside you, and you'll both be responsible for repayment of the loan.
What is bad about an unsecured loan? ›
Because an unsecured personal loan has no collateral backing it, you may encounter higher interest rates, fees and other things they could limit how far is the loan could go. In addition, the lack of collateral could make it hard for those with lower credit scores to get approval.
An unsecured loan is a loan that is not secured by other funds or property and typically relies heavily on your credit score for approval. In most instances, the only thing backing the loan is your pledge to pay it back. A secured loan is a loan that is backed by assets or property, which guarantees repayment.
Do unsecured loans hurt your credit? ›
A personal loan will cause a slight hit to your credit score in the short term, but making on-time payments will bring it back up and can help improve your credit in the long run. A personal loan calculator can help determine the loan repayment term that's right for you.
What is the limit of unsecured loan? ›
Both salaried and self-employed individuals can apply for unsecured loans. You can avail a loan amount of up to Rs. 30 lakhs*
What happens if you default on an unsecured loan? ›
Even if your loan is unsecured, should it end up in default, there's always the possibility that a lien will be placed on your home until the debt is repaid.
Can unsecured loans be written off? ›
For e.g. If any person has taken a loan from the bank and fails to return it within the stipulated time then the bank will try to recover the amount with the help of various legal means or by contacting his family members, if in case even after this step bank fails to recover the amount, the bank may write-off the loan ...
What's better, a secured or unsecured loan? ›
Since secured loans will often have lower interest rates and higher borrowing limits, they may be the best option if you're confident about being able to make timely payments. That said, an unsecured loan may be the best choice if you don't want to place your assets at risk.
Is an unsecured loan better? ›
A secured loan usually means the lender can take your home if you fail to repay. Unsecured personal loans are less risky, but you'll still need to repay on time.
What happens if you don't pay back an unsecured loan? ›
Defaulting on an unsecured loan
Then, once your account goes to collections, the collections agency has the right to sue you for the money you owe. If necessary, they can also get a court order to garnish your wages or put a lien on any assets you own, such as your home.
What type of loan is generally unsecured? ›
The difference between an unsecured loan and a secured loan is that an unsecured loan doesn't require collateral. Common examples of unsecured loans include credit cards, student loans, and personal loans. The most common examples of a secured loan include a mortgage or auto loan.
