Why opt for Personal Loan
Before listing out the many benefits of Personal Loan you need to understand what this personal loan is and the eligibility criteria of this. These loans are unsecured loans offered by banks and also NBFC (Non-banking Financial companies) offered to individuals for their personal needs. These are based on specific criteria which includes employment history, income level and credit along with the capacity of repayment.
The personal loan is not secured against assets. That is, the borrower does not need to put any collateral like property or gold to get this loan. In case of any default, the lender cannot auction anything that you own. These loans have a high rate of interest as compared to the car, home or gold loans as these tend to be risky.
Some Advantages of Personal Loans:
Personal loans are apt for any emergency requirement and have multiple advantages. Listed below are a few of these benefits.
As compared to the processing of home loans or other loans which take almost 4 weeks, personal loans are approved much faster. These, thus, work apt for immediate requirements like a medical emergency or even a wedding. These can be approved even quicker if the borrower has good credit history.
2. without any Collateral:
As these loans are unsecured there is no collateral required for obtaining the loan. This is the reason you find most people opting for this specific loan. The interest rates of these loans are between 14% and 16%. You also have the freedom to negotiate when applying for this loan, especially if you opt for a NBFC.
3. Apt for Credit Card payments:
As you are aware that credit cards charge a high rate of interest that is between 24% and 30% annually. Most often you find that people opt for personal loans to pay off this debt. It is advisable to opt for consolidation of the cards before you apply for the personal loan.
4. Flexible usage:
These personal loans are apt not only for disaster management but also for luxury purchases or holidays abroad. The lender does not question you the reason you want this loan for.
5. Creating an Emergency Fund:
These days you find most people living from pay-check to pay-check. That means there is no saving involved. Instead of waiting for an emergency to happen, it is advisable to create a fund specifically for these days. This is possible only with the personal loan.
Information on Personal Loans:
Personal loans can be applied with the spouse jointly. The loan application is then processed in an income bracket which is higher. This means you are eligible for a larger amount of personal loan.
There are some financial institutions which allow prepayment of the loan after a specific number of repayments. There might be prepayment charges on the balance amount of the loan.
It is important to go through the terms and condition of the financial institution before you sign the dotted line of the personal loan form.