Is There a Difference Between a Personal Loan & Professional Loan?

Professional loans are offered to working professionals like Accountants, doctors, lawyers, etc., looking to expand their business or grow their practice. Though professional loans require bare minimum documentation, they come with a reasonably competitive rate of interest. Processing charges are at a minimum cost with the relief of no hidden charges. Eligibility criteria for professional loans depend on the applicant’s current financial standing and credit history, just like other types of loans. Financial institutions/ lenders have varied criteria.

  • With an additional benefit of a top-up facility to avail a different loan amount in the future under the current agreement, applicants are intrigued to make the most of this offer.
  • Nowadays, no physical signing of loan documents is needed, the entire procedure is completed online, and a signed copy of the loan agreement is readily available to both parties.
  • General documents required are – KYC documents, business proof and address, professional qualification proof.

Personal loans are a mode of sourcing funds for the personal needs of oneself or the family. Personal Loans support you financially if you plan for higher education or need to cater to an emergency, organise a wedding, or even plan for an international vacation.

  • This is an unsecured type of loan – which means it requires no collateral security. Depending on the applicant’s monthly income, we can borrow the necessary funds from financial institutions or lending houses. In case of personal loans, the maximum amount that is generally offered is Rs 50 lakhs.
  • The wise method to apply for a personal loan is to start with rigorous research of the several plans offered by the lenders.
  • After considering all terms and conditions and clarifying self-capacity to avail the loan, one can arrive at a decision.
  • Personal loans and professional loans both come with an interest payment and monthly EMI payment factor.
  • The personal loan interest rate can be analysed and compared within the market pool. There is a tool to check personal loan EMI online. You can use the personal loan EMI calculator readily available for free.
  • You can input the loan terms and required details and have a rough estimate about the personal loan EMI required to be paid by you.
  • An instant personal loan can be availed from the comfort of your home/office by simply visiting the lender’s website and clicking on the ‘Apply’ option.
  • Personal loan eligibility is checked before passing the loan – documents submitted like – ID Proof, income proof, residential proof, are verified and once satisfied, the loan is sanctioned.

Which is better between Personal loans and Professional loans?

It can be said that professional loans carry an edge over personal loans as they can be customised. Professional loans can be tailor-made depending on the requirement – it has benefits like flexible tenure, higher loan sanction amounts, comparatively lower processing fees, and reasonable pricing. Professional loans may also offer benefits like part-payment of the sanctioned loan with no additional charges or even full pre-payment of the loan with no charges at all. These features are generally unavailable in personal loans, leading to an increased cost with moderate benefits. Even though both have their pros and cons, it depends on the needs and capacity of the individual to make the most of it.