Sometimes it might be hard to achieve your dreams without having liquid funds or a collateral that can be pledged to borrow money. Whether it is growing a small business or planning higher studies, money should never be an issue to put a pause on your dreams and for that, there is one solution. The solution is to borrow unsecured funds.
We will go through the process of how to bag a small personal loan without any security. First, let us understand:
What are Collateral-Free Loans?
As the name suggests, unsecured or collateral-free personal loans are short-term loans offered by the lending institution without any security.
Collateral refers to a transferable asset that can be pledged by the borrower to secure the repayment of the borrowed money.
Generally, when large loans are sanctioned financial institutions keep a liquid asset as a security for the repayment of the loan amount.
Advantages of collateral-free personal loan
- One of the significant advantages is that you do not have to worry about your asset. Since the nature of a personal loan is unsecured you can apply for it even without pledging any asset.
- Due to technological advancement, the loan approval time has been cut short. Furthermore, if you have a pre-approved offer on your account, the loan can be disbursed within seconds. So, to get some quick money you can rely on personal loans.
- Personal loans do not have any strict boundation on usage. Personal loans are disbursed directly into your bank account thus they can cover a lot of other expenses such as weddings, traveling and hospitalization expenses.
Ways to Get A Personal Loan Without Security
Repay Previous Dues
It will be an added advantage if you pay off your existing loans or credit card dues before applying for a fresh unsecured loan. It will reduce your monthly expenses, thus, will save more money in your pocket. This will give lending institutions a sense of confidence, as they focus on the disposable income of the borrower. You should know that in the case of unsecured loans, it is always better to have a lower debt-to-income ratio.
Improve/Build Your Credit Score
It is very important to have a good credit score while applying for an unsecured loan. To improve your credit score you need to start monitoring it. You can easily check your credit/CIBIL score online to know about discrepancies if any.
Check the eligibility on the lender’s website
Once you are confident that your CIBIL score is good to bag a low-interest personal loan. You can visit different lenders’ websites to check for the eligibility and offers if any. Also, check for the eligibility to apply for a small personal loan, as it varies from a different lender to lender.
Major lending institutions such as Bajaj Finserv provide pre-approved offers to their existing customers. So, to check the availability, you can visit their website and fill in the information.
Fill the application form
Once you are sure of the eligibility criteria of the lender, and if you think you fit in. You can go ahead with filling the application form. You will be required to upload/submit these documents:
KYC documents (Do not worry if you are an existing customer, they already have it in their database.)
Proof of address
Unsecured loans can be a blessing during emergencies, as their approval time is lesser than secured loans. You can follow these steps to bag without pledging any security.
Read Also: How Does a Small Personal Loan Work?