Unsecured lending does not require the need a security or collateral as the loan is issued based on the borrower's creditworthiness. You can avail a short term or long term unsecured collateral free loans from various lenders, including financial institutions or NBFCs. The unsecured loans catering to diverse financial needs such as wedding expenses, medical bills, education costs, or leisure pursuits like vacations.
An unsecured loan offers additional benefits like swift approval and a seamless borrowing experience. With Buddy Loan, getting unsecured loans has become more convenient. You can secure an unsecured loan of up to ₹15 Lakhs, starting at an attractive interest rate of 11.99%* p.a.
While you continue to read more about unsecured personal loan, you can also visit our dedicated personal loan page for comprehensive details and additional information.
Interest Rates on Unsecured Loans
Understanding the interest rates on unsecured loans is essential when considering borrowing options. The interest rates associated with unsecured loans play a major role in determining the overall cost of the loan and affect your repayment terms significantly.
| Loan Amount | ₹10,000 to ₹15 Lakhs |
| Tenure | Up to 5 years |
| Interest Rates | 11.99%* p.a. onwards |
Eligibility for Unsecured Loans
Eligibility for unsecured loans involves various factors like creditworthiness and income stability to employment history and debt-to-income ratios, these criteria collectively influence one's eligibility for availing unsecured loans. The unsecured loans are available for salaried, self-employed and students.
Age limit: 21 - 60 years of age
Employment: Employee of private limited companies or public sector undertakings, including central and state.
Experience: Applicant who has had a job for at least 2 years, with a minimum of 1 year with the current employer.
Minimum Income: ₹15,000 income per month.
Credit Score: 750 or higher
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Documents Required for Collateral Free Loans
The documents needed can vary from lender to lender.Let’s go through the in general list of documents needed to get a unsecured loan from below:
Proof of Identity: Government-issued photo ID like an Aadhaar Card, Passport, Driving License, PAN Card, or Voter ID Card.
Proof of Address: Valid address proof such as Aadhaar, utility bills or rental agreements, passport, etc.
Income Proof: Documents like salary slips, bank statements, or income tax returns.
Passport-sized photographs.
Unsecured Loan EMI Calculation
Estimate the EMI for your unsecured loan using an personal loan EMI calculator. Just enter the loan amount, rate of interest and the loan tenure to check your EMI.
Loan Amount & Repayment Period
Loan amounts for unsecured loans vary widely based on factors like creditworthiness. Repayment periods typically range from a few months to several years, varying by loan type and lender policies. Refer to the table below to have a quick understanding of the repayment period typically levied on the maximum loan amount.
| Repayment Period | 1 to 5 years |
| Loan Amount | ₹10,000 to ₹15Lakhs |
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Types of Unsecured Loans
Unsecured loans offer flexibility without requiring collateral. Knowing the various types available is crucial to finding the ideal fit for your financial needs. Let's delve into an overview of unsecured loan options.
Personal Loans: Typically used for various personal expenses, such as debt consolidation, home improvements, or unexpected costs. They're not backed by collateral.
Credit Cards: A common form of unsecured credit where the card issued extends a line of credit that you can use for purchases, with no collateral required.
Student Loans: These loans are used for educational expenses and don't require collateral. They can cover tuition, books, and living expenses while in school.
Personal Lines of Credit: Similar to credit cards, but typically with lower interest rates. They provide access to a set amount of money that you can borrow as needed.
Medical Loans : Designed to cover medical expenses such as procedures, treatments, or surgeries. They're unsecured and offered by certain lenders.
Consolidation Loans: Used to combine multiple debts into a single loan, often with a lower interest rate. They're unsecured and can simplify debt management.
Signature Loans: These loans are granted based on the borrower's creditworthiness and signature, without requiring collateral.
Getting Unsecured Loans with Bad Credit
Getting unsecured loans with bad credit can be challenging, but it's not impossible. Here are some options you can explore:
Online Lenders: Online lenders consider factors beyond credit scores for those with poor credit but often charge high-interest rates and fees.
Credit Unions: Unlike traditional banks, credit unions have more flexible lending criteria. They may provide payday alternative loans (PALs), specifically for individuals with poor credit.
Peer-to-Peer Lending: Peer-to-peer lending platforms connect you with individual investors willing to lend money regardless of your credit score.
Family or Friends: Consider approaching family members or friends who might lend you money. Formalize the agreement in writing to ensure clarity.
Secured Loans: If you have an asset like a car or a savings account, you might qualify for a secured loan where the asset serves as collateral. These loans usually have better terms and rates compared to unsecured loans.
Cosigner: Having a cosigner with good credit might increase your chances of getting approved for an unsecured loan. However, remember that if you cannot make payments, it can negatively affect the cosigner's credit.
Factors to Consider Before Applying for Unsecured Loan
When considering applying for an unsecured loan, understanding the process and prerequisites is crucial. Exploring the steps and requirements involved in obtaining an unsecured loan can help you navigate the application process more effectively.
Assess Your Financial Situation: Evaluate your credit score, income, and existing debts to understand your financial standing.
Research Lenders: Explore different lenders, compare interest rates, fees, and terms to find a suitable option.
Gather Documentation: Prepare necessary documents, such as identification, proof of income, and employment details required for the application.
Submit Application: Complete the lender's application process, providing accurate information and details about the loan amount and purpose.
Wait for approval: The lender will review your application, credit history, and financial details to determine approval and loan terms.
Review and Accept Terms: If approved, carefully review the loan offer, including interest rates, repayment schedule, and any associated fees. Accept the terms if they meet your requirements.
Receive Funds: Once you accept the loan terms, the lender disburses the funds to your bank account.
Steps to Apply Online for Unsecured Loan
Looking for a hassle-free way to avail an unsecured loan? Buddy Loan stands out as a reliable platform that streamlines the process, making it easier than ever to access personal loans. From application to approval, Buddy Loan ensures convenience and reliability every step of the way. Now, you can avail your quick unsecured loan by following these quick steps. Access personal loans effortlessly with just a few easy steps:
Step 1: - Visit buddyloan.com or Download & install the Buddy Loan app (Android or iOS).
Step 2: Open the Personal Loan Application Page. Provide the mobile number and enter the received OTP.
Step 3: Specify the desired loan amount & personal email. Next, choose the Personal Loan option
Step 4: Choose the employment type (Salaried, Self-Employed, or Student) and the salary mode (bank or cash).
Step 5: Enter your work details (Including company name, years of service and Designation)
Step 6: Enter your personal details (Including Full Name, PAN, address DOB & Gender)
Step 7: Provide your communication address, and income details and Click the ‘Submit’ button.
Why wait further? Apply now!
Tips to Improve Approval Chances
If you're uncertain about your chances of approval for an unsecured loan, here are tips you can follow to enhance your loan eligibility gradually.
Check and Improve Credit: Review your credit report for errors and work on improving your credit score by paying bills on time and reducing outstanding debts. Firstly, start with checking your credit score.
Stable Income: Demonstrating a steady income and employment history can positively affect your approval chances.
Lower Debt-to-Income Ratio: Reduce existing debts to improve your debt-to-income ratio, which lenders consider when assessing your ability to repay the loan.
Cosigner or Guarantor: Consider having a cosigner with a strong credit history to increase your chances, especially if your credit is poor.
Research and Compare: Explore multiple lenders and loan options. Some may consider factors beyond credit scores, offering better terms, or tailored loans for your situation.
Prepare Necessary Documents: Have all necessary documents, such as proof of income, identification, and any additional requested paperwork, ready for the application process.
Explain Circumstances: If applicable, provide explanations for negative marks on your credit report, such as a job loss or medical emergency, to provide context to lenders.
Avoid Multiple Applications: Submitting many loan applications within a short time can negatively affect your credit score. Be selective and apply to those you believe you have a good chance with.
What Happens If You Can't Repay an Unsecured Loan?
Facing difficulty repaying an unsecured loan can lead to various problems. When unable to meet repayment obligations for an unsecured loan, several consequential actions and financial implications may ensue.
Late Fees and Penalties: Missing payments often incur late fees or penalties, increasing the overall amount owed.
Impact on Credit Score: Non-payment negatively affects your credit score, making it harder to secure future loans and potentially increasing interest rates.
Debt Collection: Lenders might employ debt collection agencies, leading to calls, letters, or legal action to recover the debt.
Legal Actions: In severe cases, the lender may sue. A judgment could cause wage garnishment or liens on assets.
Default and Acceleration: Continued non-payment can lead to loan default. The lender might demand immediate repayment of the entire outstanding balance.
Impact on Co-signer: If someone co-signed the loan, they become liable for repayment if they default, affecting their credit.
Frequently Asked Questions
An unsecured loan is a type of borrowing that doesn’t require collateral, such as property or assets, to secure the loan.
Unsecured loans don’t cause collateral, while secured loans require assets as security against the borrowed amount.
Common uses include covering personal expenses like home improvements, medical bills, debt consolidation, or funding small business ventures.
Factors include your credit score, income stability, employment history, and debt-to-income ratio.
Interest rates can range widely, but they often start from around 6% and can go higher based on creditworthiness and the lender's terms.
A higher credit score usually increases your chances of approval and may secure better interest rates, while a lower score might lead to higher rates or denial.
Yes, it's possible, but it might come with higher interest rates or stricter terms due to increased risk for the lender.
Loan amounts for unsecured loans vary significantly but often range from a few thousand dollars to $50,000, depending on the lender and your creditworthiness.
Repayment periods typically range from one to seven years, although this can vary based on the lender and the loan amount.
Improve your chances by maintaining a good credit score, demonstrating stable income, managing existing debts responsibly, and avoiding frequent credit inquiries.
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