MONEY AND

BANKING
Personal Loans
 Table of Content
Topic Page
Introduction
Structure of personal loans
Documentation
Features
Comparison in Grid form
Conclusion
Recommendations
Bibliography
INTRODUCTION
Personal Loans:
The loans given for personal, family or household use are known as
personal loans. They are different from loans for business. Personal
loans are usually unsecured, although in some situations a guarantor
maybe required.
Features
The typical features of personal loans are given below:

1. Easier and quicker to obtain: There is less paperwork

involved in applying for personal loans compared to other loans like
mortgages and home equity loans. It is easier to apply for and its
processing is also faster.

2. No collateral: Collaterals are not usually required for personal

loans. To qualify for the loan, the bank will usually analyze a
person’s credit rating, current income, debt load and other issues
that may affect your ability to repay the loan.

3. Fixed Interest rate: Some loans have interest rates that keep
changing over the period of the loan. Personal loans have fixed
interest rate that cannot be changed and both interest rate and
repayment amount remains the same for the duration of the loan.

4. Flexible repayment period: Banks give choices of repayment

periods and the borrower can choose repayment plan that is most
suitable for him/her.

5. No hidden costs: The repayment amount is decided from

before and therefore there are no hidden costs attached to personal
loans.

Documentation

General documents required when applying for personal loans are:

• Copy of CNIC
• Salary Slip
• Bank Statements
• Application form
Grid:

Bank Loan Repayme Interest Eligibility

amount nt period rate
• Permanent
PKR Up to 5 Pakistani
50,000 to years. (12 Resident
PKR to 60 • Age between 21-
1,000,000 months 60 years
repayment) • HSBC
Premier/Status
account holder

• Age: 21-60 years

Rs 25,000 12-60
to Rs. months
• Minimum Income
requirement
500,000
Rs. 12,000
Uses of Personal Loans:
Personal loans are obtained for a variety of reasons. Some common
uses are given below:

1. Education: Sometimes individuals do not qualify for financial aid

and they can get personal loan for this purpose as it is easier and
faster to obtain and requires less paper work.
2. Medical bills and emergency surgery: Medical bills can be
paid off by the help of personal loans.
3. Down payment on a home/ down payment on a home:
Personal loans can be used to make down payment on a home.
Also, it can be used for home renovation and improvements.
4. Wedding: Wedding expenditure can be easily financed by
personal loans.
5. Vacation: Personal loans can be used to finance a vacation trip
to those who otherwise would not be able to afford it.
6. Purchase an older vehicle: Banks do not finance the purchase
of second hand cars so individuals can choose to take personal
loans to finance such a purchase.
7. Consolidate other debt: Interest paid on personal loans is a
less than credit cards which is very high. Paying off the interest
on credit cards could be consuming a large portion of disposable
income. Therefore individuals can opt for personal loans instead.
Bibliography
1. http://www.lendingtree.com/personal-loans/advice/personal-loan-basics/uses-for-
personal-loans/
2. http://www.mcb.com.pk/
3. http://www.hsbc.com.pk/1/2/home
4. https://www.ubl.com.pk/consumer/cashline/
5. http://www.standardchartered.com/pk/personal/loans-mortgages/en/lm-
landing.html
6. http://www.citibank.com/pakistan/consumer/products/pl/plhmecc.htm
7.