Personal Loan Vs. Professional Loan: All You Need To Know

What is a Professional Loan?

A professional loan is given to a trained professional looking to set up or upgrade their trade. 

As the name suggests, a professional loan can only be availed by professional and self-employed individuals such as doctors, lawyers, chartered accountants to make any investment in their business.

A professional loan is an unsecured form of loan, which means that the borrower would not be required to keep collateral against the borrowed money. However, the individual needs to be well-versed in their profession and should possess a veritable certificate to prove their expertise in the field.

What is a Personal Loan?

On the other hand, a personal loan can be borrowed by both salaried and self-employed individuals to meet personal financial expenses or make an investment in their business.

Some banks offer personal loans to salaried individuals only, but most digital lenders, such as MoneyView, offer personal loans to both self-employed and salaried persons. 

Personal loans are also unsecured loans that can be taken to meet a number of expenses- to finance education, pay for a trip, meet a medical crisis, or pay off existing debts.

It is a versatile form of a loan as it can be used to meet different kinds of financial needs, which is unique to personal loans alone.

When To Take A Professional Loan?

Professional loans have some attractive features which distinguish them from other types of loans. Opting for a professional loan is recommended against a personal loan if you are a certified professional looking to expand your trade. 

For example, if you want to renovate the space of your practice, purchase some advanced equipment, or publicize your business, you can opt for a professional loan. One exclusive feature of professional loans is that they are tailor-made to suit the precise needs of your practice.

The business needs of an insurance agent will differ from those of a lawyer. Both these practitioners will have different trade-specific needs and, consequently, need for other loan plans.

Professional loan plans can be customized according to the specific needs of your business so that the advantages to your business are maximum.

When To Take A Personal Loan?

Personal Loans can act as a saving grace when there is an urgent personal expense to tend to. 

If you’re planning to buy a house but fall short of money, you can opt for a personal loan instead of a home loan.

The added advantage is that while you would have had to mortgage your house in the case of a home loan, a personal loan can be availed without the need to provide any surety/collateral. 

Besides buying a house, a personal loan option may be available to meet a host of other requirements, such as planning a wedding, taking a vacation, making an expensive purchase, etc. Personal loans are a lucrative option as they do not require security and can be disbursed almost instantly.

How Can You Apply?

There are a number of banks and money lending organizations that loan out money at different rates of interest, tenure, etc.

Things to keep in mind:

• Before applying for any loan, you must check out the provisions offered by each of these institutions and make an informed decision. Choose the credit facility that best compliments your business requirements. 
• Before signing the loan agreement, do read the terms and conditions thoroughly to ensure that no hidden charges are levied as part of the loan agreement. 

Both personal loans and professional loans are now offered at competitive rates of interest and flexible repayment tenures. The whole money-lending business has undergone a digital makeover, which means that you can now apply for a loan and receive the loan amount from the comforts of your house within as early as 24 hours.

This makes the entire loan application process entirely digital and paperless, with minimal documentation.

Application process:

To apply for a personal or a professional loan, visit an acclaimed money-lending website or download the app on your phone. 

• After you input your personal and professional details, the eligibility criteria will flash. See which loan amount, rate of interest, and repayment tenure you are eligible for. 
• After assessing the eligibility criteria, you will have to input the loan details you wish to opt for.
• Upload the pertinent documents and wait for the completion of the verification process.
• Once your documents are verified, you will be asked to sign a NACH form to obtain consent for automatic deduction of EMI from your credit account to enable you to repay the loan in monthly installments without manual intervention.
• Sign the loan agreement after thorough scanning if it is agreeable to you.
• Once the final loan agreement has been signed, the cash loan will be disbursed within 24 hours. The disbursement of the money will vary depending on the bank, lender, or credit union you choose to borrow from.

MoneyView is one of those personal finance solutions that you can rely on. It offers personal loans starting at an affordable rate of interest of 1.33%.

MoneyView’s loan application process from start to end is quick, digital, and paperless, with the money being transacted within an hour of verification.

Documents Needed to Apply for a Personal Loan Vs. Professional Loan?

The general documents required to apply for personal and professional loans are given below. However, you might be asked to submit additional papers depending on the specific requirements of the bank or financial institution you apply to. 

Professional loan applications require a few additional documents compared to personal loans that attest to professional expertise in the craft for which the loan is needed.

Documents Required To Apply for a Professional Loan:

• Degrees/diploma certificates attesting to your professional expertise in the concerned field.
• One of the mentioned identity proofs: PAN Card, Aadhar Card, Voter ID, or a valid Passport. 
• One of the following address proofs: Utility bills, Driving License, Telephone bill, etc.
• Bank statements of the last 6 months that show your business income
• Statement showing profit and loss of your business dealings
• Proof that you are the legitimate owner of the property you are using to conduct the practice or documents showing that you have it on lease/rent.

Documents Required To Apply for a Personal Loan:

• The documents required for proof of address and identity are the same for both personal loans and professional loans. 
• For proof of income, both salaried and self-employed individuals need to present the account statement of the last 3 months where their salary/income amount is credited.

Professional Loans Vs. Personal Loans: Everything In A Nutshell:

• Personal loans can be used to meet any personal or professional requirement without accounting for the specific nature of the purpose to the bank/financial institution from which you are borrowing the loan. Professional loans can only be borrowed to finance the business requirements of a specialized professional.
• Both salaried and self-employed persons can take personal loans. Professional loans can be taken by self-employed professionals practicing a specific trade.
• The loan application processing time for personal loans is less than that of professional loans for the very reason that professional loans require more documents for proof than personal loans.

Apart from this, both personal and professional loans are now given at competitive rates of interest with flexible loan amounts and repayment tenures, enabling borrowers to make a choice from a host of available options.

Originally posted 2021-11-24 11:41:57.