With our fast-paced lives, we rarely get the chance to fulfil our small dreams. Perhaps you’ve always dreamed of renovating your home or travelling abroad with your family. However, due to financial constraints, we had to put off our dreams. In this situation, personal loans may be of great assistance. You can use these unsecured loans to cover medical expenses, plan a lavish wedding, or renovate your home. Banks and non-banking financial companies (NBFCs) in India offer affordable personal loan interest rates with minimal documentation requirements. Check out the top 5 benefits of taking out a personal loan in this article.
Understanding Personal Loan
Personal loans are the amount of money that can be borrowed to suit a variety of purposes. For instance, if you need to consolidate your debts, pay for home renovations or have a dream wedding, it is possible to get a personal loan. Banks, credit unions and internet lenders offer private loans. You’ll need to repay the money you borrow over time, usually with interest. Certain lenders may also charge fees for personal loans.
Benefits of Personal Loan
Personal loan apply online can benefit you in the following ways:
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No collateral is required
As opposed to secured loans such as a home or auto loan, you don’t have to put up any assets as collateral. It is easier for people who lack collateral or are unwilling to put their assets at risk to obtain personal loans. Moreover, since no asset verification or value is required, the process of verification for a personal loan is faster and more convenient.
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Large loan amount
The size of the loan amount offered to borrowers is one of the main benefits of taking out a personal loan. Personal loans offer large loan amounts, depending on the lender and the borrower’s creditworthiness. For those who need a large sum of money for personal use, this option is appealing. In this way, you can meet your responsibilities while still having the financial flexibility you need.
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Rapid disbursal
The processing and issuance of personal loans is more rapid than that of other types of loans. Therefore, it is a popular choice for people who require money immediately. It is typically possible to receive a personal loan within 24 hours after approval. Consequently, it provides a convenient way to pay for unexpected or urgent expenses.
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Hassle-free documentation
Another big advantage of personal loans is the minimal documentation required. All supporting documentation for online applications is digital. You can upload the necessary documentation with your application form. There is no paper involved in the entire process. For the application process, financial institutions need documentation of your age, address, salary slips, income tax returns, and credit history.
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Convenient tenures
Most personal loans have relatively flexible repayment terms, making it easy for borrowers to repay their debt. A customer can select a duration for their loan between 6 and 96 months. For those who need more flexibility and freedom in their repayment arrangements, this may be the best option.
Points to Know When Taking Out Personal Loan
When taking out a personal loan, you should know the following points:
- You’ll have to pay more interest if you take out a loan for a longer term than needed. Use a personal loan repayment calculator before taking on debt.
- Comparing multiple lenders’ offers can help you find the best deal and potentially save you interest. Before applying for a loan, compare interest rates, fees, and lender reputations.
- Your credit score plays a significant role in determining your eligibility for a loan and interest rate. Lenders may also charge higher origination fees to borrowers with less creditworthiness. Knowing your credit score helps you know what to expect in terms of costs before applying.
- Watch for hidden fees and penalties by reading the lender’s terms and conditions page to avoid paying more than you expected. To find out how much your loan will cost, use a loan calculator.
- You need to read the fine print before you sign and finalise the loan agreements so that you don’t accidentally violate their terms.
Conclusion
Personal loans are a great option for consolidating high-interest debt or for major expenses, such as home improvements. Instant loan app like Fibe can help you cover small or large expenses during financial emergencies. A lot of personal loans are unsecured, which means there is no collateral required, and may come with low interest rates and no fees. You calculate your monthly payments using the online personal loan EMI calculator. This requires only basic inputs such as the amount of the loan, the repayment tenure, and the interest rate of the loan.