Personal loan facility is the best and most effective facility in financing the required number of items. Many types of personal loans are available today, such as for emergency medical expenses or for expensive purchases or education. However, ignorance about how these types of loans work can cost you more than a profit. In order to help you with that, here is a complete guide on how personal loans work and how you can use them to your advantage.
The Meaning of Personal Debt
An individual loan can be defined as a loan that can be easily (usually within a period of 2 to 5 years) repayable within a few years. Repayment of this fund will be done in monthly installments and interest will be paid along with it. The interest rate may vary depending on the lender and the term of the loan.
Basic Features of Personal Debt
There are 5 basic features to a personal loan, but it depends on the lender.
Interest rate
Loan interest rates are charged as a percentage of the total loan amount. Money is defined as the cost of borrowing. Depending on the amount of the loan, the term of the loan and your credit score, you will have to pay it to the lender every month until the end of the loan period.
Debt term
The loan term is the period for which you have to repay the loan. For example, the maximum loan term for a relaxed personal loan offered by HNB FinanCE is 5 years.
Fees
This is the cost incurred in regulating the loan amount. These fees. Depending on how the relevant financial institution regulates personal debt. There may be several fees such as documentation fee, attorney fee, service fee.
Organizing documents
In order to ensure that the risk level of the loan is kept to a minimum, official documents related to the person’s salary, credit score and guaranteed assets should be submitted along with the application form requesting the loan amount.
Other features
Penalties, higher interest rates, and the specifics of the collateral used to obtain a loan are some of the basic features of a loan provided by a bank or a financial institution. These things can vary depending on the financial institution you receive the loan from.
How Personal Debt Works
Understanding how personal debt works is a very simple matter. Take, for example, HNB FINANCE’s Relax Credit Plan.
If you need a loan ranging from Sri Lankan Rupees 75,000 to Sri Lankan Rupees 3,000,000, you can get it by submitting collateral or 2 mortgages. Loans up to 12,000,000 rupees can be obtained by mortgaging immovable property.
The loan amount is usually determined based on your ability to repay the loan amount including interest. This can last for 1-5 years.
Once the loan amount is confirmed and disbursed to you, the loan must be repaid with interest until the end of its term.
If you are unable to repay the loan, you may have to pay a penalty and additional interest based on the balance.
Requirements for obtaining a personal loan
Below are some of the requirements that you need to meet in order to get a light loan amount like our Relax Personal Loan.
Age – Individuals between the ages of 24-50 are eligible to apply.
Credit score – A person should have a satisfactory credit score rating approved by the Sri Lanka Credit Rating Information Bureau.
Ensuring income – The person must have the ability to repay the loan within the given period. The person should therefore submit documents that can confirm the existence of adequate sources of income.
Property Guarantee – Depending on the size of the loan, two sureties or mortgages are required. These requirements are generated in order to reduce the risk in the event of default on the loan amount.
Currently you can use this description to make your life much easier and more comfortable and use it to its full extent to get a loan like Relax Personal Loan.
