Personal loans can be the best option to go for in so many circumstances. It can literally be used for just about anything. Few of the lenders might want to know the reason for what you’re going to use the lent money for, however, if you have borrowed it for a legal and responsible reason, you can do whatever you like with it. Credit Bazaar gives you various advantages and perks of getting a personal loan, mentioned in detail below:
- Quick approval: It is not a great deal to get a personal loan. Almost all financial institutions and banks offer personal loans at reasonable interest rates to borrowers. As compared to other types of loans, these loans are pretty easy to get. Basically, if you have a really good credit score and meet the eligibility criteria properly, you can acquire a personal loan in 72 hours time period too. Furthermore, few banks also provide the facility for approving personal loans online for existing customers.
- No middleman or agent required: One of the main advantages of getting a personal loan is that you do not have to approach an agent or a middleman. This evades all the unnecessary expenses and delays. So, for the purpose of getting a personal loan, you can approach the financial institution or bank directly.
- Beneficial for debt consolidation: One of the famous advantages of personal loans is for paying off high-interest credit card debts. This is usually done in circumstances where your one or more of your credit cards are charged to the highest extent, that is when you can take a personal loan for consolidating all the charges of the card into a single monthly payment. And one of the key points to note here is that the interest rates on this personal loan could be much lower than the annual percentage rates (APRs) on your credit cards. It is actually wiser to pay high-interest debts such as credit cards or student loans by choosing a lower interest loan. This is how a personal loan consolidates all your existing debts.
- No security or collateral needed: Primarily since it is an unsecured loan, you do not have to arrange any collateral to get it. It is easy to apply and acquire it. On the whole, it is to borrow money without risking any of your assets. Not all of the personal loans might be unsecured, however, many are. You may prefer taking out a loan that is not attached to your car, house or any such assets. The point to note here is that though this loan is not secured by any collateral, it does not mean the consequences of not paying back the loan in the long term are less dire. The financial institutions can take all strict legal measures against you for collecting the loaned amount back. It can take actions when there are missed payments or you reported late to the credit bureaus, and consequently get a judgment, garnish wages or even seize wages.
- Lower rate of interest: If you consider credit cards, the interest rates could be very high, which can actually cost you a lot of money. Even a little amount of saving in your interest rate can save you a good amount of money in interest expenses paid over the life of your loan. You may also easily qualify for a competitive interest rate for your loan if you have a really good credit score. An easy way is to use a personal loan calculator for checking out what your interest expense and payments could be on the personal loan. Just remember, that if your credit score is too low, you might not even qualify for a personal loan.
- Wedding payments: It is definitely very difficult to pull off wedding expenses or any such expenditure for a big event. So, if you require money for some specific purpose such as paying for a wedding, taking a trip, or repairing your car, just try to find a source of money that gives the lowest interest rates imaginable. Putting up all your charges on a credit card may actually prove very harmful if you are not able to pay the amount off within a month. Opting for a personal loan during such a large expense can save you a large amount of interest charges, provided the interest rates are lower than what is on your credit card.
- Minimum documentation: There is no verification of any asset of any other kind of certificates and proofs that are involved in getting a personal loan. Since none of your property is mortgages, a lot of paperwork is not required in this process. Minimum paperwork is necessary which makes the process easier and hassle-free. Most of the lenders try to keep it minimal by following the simplest pattern with respect to the documentation. This makes things really easy while getting the loan, as the people are expected to give only their proof of address, identity, and income in most of the cases. The major advantage of this is that the processing of applications is quick and could result in easy disbursal of loans for the customers.
- Schemes and offers: Well, you might have seen various financial institutions and banks announcing various offers and special schemes for professionals like Doctors, Architects, and Chartered Accountants and so on. All of these institutions want you to take a personal loan, and in this race, offer you the best rates and other benefits. Thus, you have a variety of loan and provider options, which you can consider before finalizing with one.
- Unsecured loan: Personal loan is basically an unsecured loan, which means that there is no collateral required to get this loan as security. So, basically, you do not have to provide a guarantee of any kind or don’t even have to mortgage your assets. They immediately process the loan once they are sure about your repayment abilities.
- Improving your credit score: A personal loan can help to increase your credit score in numerous ways. Basically, a personal loan can actually improve your account mix if your credit report shows mostly credit card debt. It is favorable to have multiple types of loans for your increasing your credit score. The best personal loans for unfavorable credit are still way better than payday loans. However, they are limited in options. Such a step would also lower the credit utilization ratio, mainly the amount of total credit used by you as compared to your credit limit. Lastly, paying back the personal loan taken is always good for the credit score, so make sure you are on time for repayment. Even when you have similar types of existing credit, a personal loan can prove useful for the purpose of adding variety to the types of credit accounts that you hold, thereby improving your credit score.
- Tenure and amount: Personal loans range from a variety of amounts. The repayment of these loans is made through EMIs as an available option. The tenure of the loan depends upon the borrowed amount and may range from 12 months to 60 months as well. Primarily, you can choose your loan duration depending upon your payment capacity.
- All purpose loan: In the case of a personal loan, it is not necessary for you to specify the direct cause of where you need the money. The amount that is credited to your name can be used for any purpose altogether. Now you have full authority to decide where exactly you want to spend the money. Unless you use it for any unlawful or illegal activity, the lenders do not have any problem with the usage of the loan. You can actually use this money to expand your business, fund your dream vacation, buying expensive furniture for your house or buying business machinery too.
- Enough loan quantum: The people going for a personal loan can ask for the amount that satisfies their specific requirements. There is no particular fixed limit to this loan quantum; however, the actual amount may vary from case to case. Subject to certain conditions, lenders willingly pay the amount that is quoted to them.
- Flexibility: You have complete flexibility to choose the tenure of the personal loan that suits you best, as the tenure goes up to 7 years. A shorter tenure means higher EMI and vice versa. Thus, you can calculate the EMI and decide the tenure accordingly. The EMI calculator is the best for calculating EMI. You will get to know the amount you have to pay every month and decide whether or not you can afford to pay the same. It basically reduces the burden of repayment of the loan as the interest is spread over a period of time.
- Financing a specific purchase: Primarily, the financing of a purchase completely depends upon whether it is an immediate need or a want. If you are considering taking a loan, it is preferable that it should be for a need that you are actually facing right now. So, if you are going to get a loan anyway, it is better to take a personal loan and pay the seller in cash as it may be more profitable than financing through the seller itself. However, do not make any decision about financing on the spot, without considering all the aspects. You can actually take an offer from the seller and then compare that with what you are getting through the personal loan. Consequently, you can decide which exactly the right choice is for you.
- Refinancing student loans: It can provide financial relief to you and your family by refinancing student loans. Depending upon the type of loan you have chosen, the interest rate on the student loan may be much higher. However, it might be difficult for you to get a personal loan that has a lower interest rate which allows you to pay off this debt faster. A point to note here is that student loans come along with tax advantages. So, you refinanced student loans would not be proved eligible in case the lawmakers were offering any loan forgiveness programs in the near future, added to those in place currently. Moreover, you will lose the ability for deducting your interest payments while filing income taxes if you use a personal loan for paying off a portion or all of your student loans. Also, it would deduct some of the benefits that come along with these loans, such as deferment and forbearance. Furthermore, a personal loan would probably not be covering it anyway if your balance is sizable. Hence, before choosing to refinance student loans, it is advised to choose very wisely.
- Zero limitation on end usage: The prime advantage of a personal loan is that it can be used for any purpose, unlike a home or a car loan. There are absolutely no limitations to the end-use of a personal loan. Therefore, a personal loan is actually the easiest way of getting cash if you any urgent requirement of capital or funds.
- Tax benefit: It does not matter if you are a self-employed professional or a salaried employee; you for sure want to save up on your taxes. If you plan to use a Personal loan for home renovation, paying the down payment of your home, or for home construction, you can file for tax deductions under certain sections to a maximum limit of 2 lakh rupees. However, for availing all these benefits, you must submit the required documents for proving that you have used this money for that specific purpose.
With these numerous benefits of Personal Loan, applying for it online is the perfect way for raising funds for fulfilling immediate financial requirements. Depending upon the circumstances, personal loans can prove very useful. However, it is advised for consulting a trustworthy financial institution and weighing all the available options, before going for a personal loan. Credit Bazaar provides you complete guidance in case of personal loans with expert opinion and counselling.
For any queries regarding Credit Score improvement or Loan contact Credit Bazaar CR Arcade 2nd Floor, Opposite Delta Garden, Next to Shree Mahalaxmi Restaurant, Mira Road East, Thane : 401107