What is an unsecured loan?

Those planning to borrow money today have several financing options to choose from. Some loans are secured, meaning they require collateral such as jewellery, property, or a vehicle. Credit cards are another common option, offering a revolving credit limit for day-to-day spending. However, for many borrowers, unsecured lending stands out as a practical choice. These loans do not require any collateral and are approved mainly based on the borrower’s income and credit profile.

Unsecured loans are often preferred for their convenience and flexibility. They allow borrowers to access funds without pledging assets, which can be especially useful for managing personal expenses. Before proceeding, it can help to check your pre-approved loan offer and understand the funding options available to you.

Unsecured loans are credit options that do not require collateral. These loans typically offer smaller amounts when compared to secured loans like mortgage loans.

An unsecured loan is usually provided without any end-use restrictions. The credit amount can be used to cover a variety of expenses, including weddings, further education, home renovation, and medical emergencies.

The Bajaj Finance Personal Loan is one of the finest examples of an unsecured loan in India, with its high loan value, ​​competitive personal loan interest rates, and flexible loan repayment terms.

Personal loans:
These are multipurpose loans that can be used for expenses such as weddings, home improvements, medical treatment, or other urgent needs. Interest rates and terms usually depend on the borrower’s credit score and income.

Credit cards:
Credit cards provide unsecured revolving credit. Cardholders can spend up to a predefined limit and repay the balance over time. Interest is charged on outstanding amounts if not paid in full.

Student loans:
Some education loans are unsecured and help students fund tuition fees, books, and living expenses. These loans often come with student-friendly repayment terms.

Unsecured loans come in various forms catering to different financial needs. The primary types include personal loans, which are versatile and can be used for various purposes without collateral. Credit cards offer revolving credit lines with varying interest rates. Student loans assist with education expenses and often don't require collateral. Payday loans provide quick cash advances, typically due on the borrower's next payday but come with high interest rates. Additionally, there are lines of credit, where borrowers can access funds up to a predetermined limit as needed, and peer-to-peer loans facilitated through online platforms connecting borrowers with individual investors.

Approval for unsecured loans is primarily based on the applicant’s credit profile. Lenders usually assess the borrower’s CIBIL score, repayment history, income level, age, and employment stability before approving the loan amount.

Applicants with strong credit scores and steady income sources generally have higher chances of quick approval. Since no collateral is involved, lenders rely heavily on these factors to assess repayment capacity. Checking your profile in advance can help you understand your position before applying.

1. Simple application procedure

Individuals can get unsecured loans quickly and without any hassle.

Bajaj Finserv Personal Loan are usually disbursed in less than 24 hours* after being approved. One of the main benefits of unsecured loans is that there are not many documents that need to be checked before accepting the loan amount because there are not any collaterals involved.

2. Minimal documentation

A personal loan can be obtained with the submission of minimal documents. With Bajaj Finance, the following documents are required while applying for a personal loan:

• KYC documents: Aadhaar/ PAN card/ passport/ voter’s ID.
• Employee ID card.
• Salary slips of the last 3 months.
• Bank account statements of the previous 3 months.

3. Flexible tenures

Bajaj Finserv Personal Loans are popular for their flexible repayment tenures, making them the best choice. For a term loan, customers can choose a tenure ranging from 12 months to 96 months. In addition to a regular term loan, Bajaj Finance also offers two unique variants of Flexi Loans - Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan. This is the best choice for those who wish to enjoy flexibility in their repayment capacity.

4. Quick disbursal

Bajaj Finserv personal loans are popular for their speed of loan processing, which can be disbursed within 24 hours* of approval. This makes it the perfect option for funding unplanned and immediate expenses without breaking your savings.

Unsecured loans
 

Advantages: No collateral required, faster processing, and easier access for borrowers without assets.
Disadvantages: Higher interest rates, lower loan limits, and stricter credit requirements.

Secured loans
 

Advantages: Lower interest rates, higher borrowing limits, and better terms due to reduced lender risk.
Disadvantages: Requires collateral, and defaulting may lead to loss of assets.

Pros of unsecured loans

No collateral required:
You do not need to pledge assets such as property or vehicles, reducing the risk of asset loss.

Faster approval process:
Applications are usually processed quicker than secured loans, making funds available faster.

Simpler application process:
Fewer documents and formalities make the process more straightforward.

Flexible use of funds:
Loan amounts can be used for multiple purposes, offering financial versatility.

No risk of asset loss:
Even in case of repayment issues, personal assets are not directly at risk.

Cons of unsecured loans

Higher interest rates:
Interest rates are usually higher due to increased lender risk.

Lower borrowing limits:
Loan amounts may be smaller compared to secured loans.

Stricter credit requirements:
Applicants with lower credit scores may find approval difficult.

Higher monthly payments:
Higher interest rates can result in larger EMIs.

Additional fees:
Some loans may include processing fees, late charges, or penalties.

• Nationality: Indian
• Age: 21 years to 80 years*.
• Employed with: Public, private, or MNC.
• CIBIL Score: 650 or higher.
• Customer profile: Self-employed or Salaried

*You should be 80 years* or younger, at the end of the loan tenure.

Before applying, it can be useful to check your eligibility for personal loan to avoid unnecessary rejections.

1. Visit the personal loan page and click on ‘Apply’
2. Enter your 10-digit mobile number and verify it using OTP
3. Fill in the application form with basic details
4. Proceed to the loan selection page
5. Enter the required loan amount and choose from Term Loan, Flexi Term Loan, or Flexi Hybrid Term Loan
6. Select a repayment tenure between 12 months to 96 months
7. Complete KYC and submit the application

To apply for a Bajaj Finserv Personal Loan, complete the online application form with your basic information, and choose the required loan amount and tenure that best suits you. Submit the documents required for personal loan and receive a loan from Rs. 40000 to Rs. 55 lakh. It is advisable to use personal loan EMI calculator to compute your repayments in advance and plan your repayment journey wisely.

*Terms and conditions apply.