Debt is not the root of all bad, despite what you might hear from some corners of the personal-finance realm. For daily transactions, financially prudent people use credit cards, fund car purchases with secured auto loans, and take-out mortgage loans to buy homes that they could never dream of paying for in cash.
For people facing an emergency financial crisis or going for big-ticket purchases, personal loans are the go-to funding choice.
What Is A Personal Loan?
If you need funds for an immediate need or a brief period, a personal loan is the best alternative. It can be used for any reason. Because it is an unsecured loan, the lender approves the applicant’s loan base’s specifics, such as age, salary, current liabilities, and credit score, among others.
Unlike in the case of a secured loan such as a gold loan or a loan against securities, or a loan against land, no time is spent on the collateral evaluation. Depending on the end-use, there may be various forms or kinds of personal loans. But generally, there is only one form of personal loan, and it can be used for any necessity.
Many personal loan advantages play a crucial role in making this credit option common.
- No Restrictions on The Fund Usage
Unlike other types of loans meant to be used for a particular reason, such as home loans or car loans, the funds you get from a personal loan can be used for any purpose. Generally, lenders do not limit the ultimate use of funds unless you use them for any illicit transaction or other illegal activity.
You can use the money to finance your dream holiday, renovate your house, grow your company, purchase business machinery or costly home furniture.
- No Security or Collateral Needed
This is one of the most important personal loan characteristics. Being an unsecured loan, the sum you borrow does not require you to have any guarantee or protection. It means that if you fail to pay the refund, you don’t have to risk losing your asset.
- Quick Disbursal Process
You will have your loan approved within two to three days if you meet the lender’s approval requirements and have a decent credit score. Some lenders that provide online services enable you to apply online and disburse the sum on the same day if they are happy with your repayment ability (up to a specific limit).
- Fixed Interest Rate
Generally, on a fixed interest rate basis, most lenders in India provide personal loans. The interest remains the same, regardless of the tenure you choose, which means you do not need to worry about interest fluctuations due to changing market conditions.
- Easy documentation
For a personal loan, the paperwork and the processing time needed is much smaller than for most other loans. With the following papers, you can get a loan: ID evidence, address proof, and proof of income. You do not even need to request any paperwork if you are pre-approved for a Personal Loan.
- Pocket-friendly repayment
Your loan can be paid off in easy installments or EMIs. Usually, the payment terms are flexible, and you can choose a tenure that allows you to tailor your monthly production to your needs. Reputed institutions like Axis Bank provide tenures of 12 to 60 months. You can check their personal loan emi calculator to get a brief about the EMI and interest rate.
Now that you know how a personal loan can benefit you, do not wait and apply for one.