Unsecured Loans: Understanding Its Types And Benefits

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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 the types 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.