An unsecured loan is a personal loan that is provided by a financial institution without any collateral. Such loans are generally provided based on the income of the applicant as well as their CIBIL score. Since unsecured loans are not backed with any collateral, the interest rates of such loans are generally much higher as compared to loan against property and the same must be considered by the applicant before making any decision

Eligibility for unsecured loans:

Since collateral is not taken in unsecured loans, the CIBIL score of the applicant becomes one of the most important factors for financial institutions to verify the eligibility of the consumer. In order to ensure a proper CIBIL score, the applicant must ensure that they have made timely payments on all loans obtained to date. Apart from such payments, a large amount of debt may also result in a lower CIBIL score due to pressure of repayment. Along with a CIBIL score, an applicant must provide income proof and in certain circumstances, a co-signer may be asked to provide a guarantee on your behalf. After verification of all such documents, an applicant will become eligible for an unsecured loan in form of personal loan.

Documents required:

Any applicant must provide KYC documents in form of PAN and Aadhar to the issuing authority. Apart from KYC documents and CIBIL, personal loan documents required are as follows:

1. Recent passport photographs of the applicant
2. Loan application form duly filled
3. Identity and Address proof along with Age proof
4. Salary Slip and Form 16 in case of a salaried person
5. Income Tax Returns
6. Bank Statement for the past three or six months
7. Cheque for the processing fee

Unsecured loans are a great tool used in case of emergency funds by an applicant however the user must be aware of the higher interest rates as any default could affect the CIBIL score of the user.

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