Are you planning to buy your dream car? Are you planning a royal wedding?
Then you can take a personal loan to meet up on these expenses and other expenses too, so you can complete your bucket list without even providing collateral.
Apart from risky motives, there are no final use restrictions. You can take out a personal loan for marriage ceremonies, education, trips, buying your dream home or car, medical emergencies, etc. Personal loans are a popular funding source due to their adaptability, lack of paperwork, and simpler processing than other varieties of loans. It typically comes with a smaller loan term of between one and five years.
Therefore, there are many advantages to taking a personal loan. In this article, we will discover the benefits of personal loans.
Advantages of Personal Loan:
People prefer personal loans for a reason, or many. There are multiple advantages to taking out a personal loan:
- Quick Approval and Disbursal: A personal loan can be obtained quickly by the borrower, usually within a day. You can get it quickly if you have a good credit score.
- Minimal Documentation: You do not need to provide many documents, unlike other loans. Also, you can submit the required documents online.
- Pocket Friendly Repayment: Payment terms are flexible, and you can pay in easy monthly instalments. You can pick a tenure that allows you to optimize payments and is best suited for your pocket.
- Multiple Payment Options: It is possible to either pay online or request post-dated cheques. Most lenders also allow the payment of just interest for the first few months. It will initially keep the burden of EMI minimal.
- No Restriction on End-Use: As mentioned earlier, you can use the loan amount for anything you like, like a vacation, home upgrades, expensive education, medical emergencies, etc.
- Lower Interest Rate: The rate of interest on personal loans is comparatively lower than that on credit cards. On July 20, 2022, the average interest rate for personal loans was 10.28%, compared to 16.80% for credit cards. With a good credit score, you can get a personal loan at an interest rate much lower than credit cards’.
- No collateral: You are not required to come up with any collateral for an unsecured instant personal loan. That means you don’t have to put up any assets as collateral, like a car or home, for an instant personal loan. However, if you are unable to repay the loan as agreed with the lender, you will face major financial and credit setbacks. But you will not lose your home or your car. If you are in any situation where you are short on cash, personal loans can serve as a good backup plan. However, you should not use it randomly. You must acquire a personal loan only to cover unpreventable expenditures or to make a long-term investment.
- Better credit score: If you are new to credit or have a low credit score, securing affordable personal loans and paying them back on time is a good way of building or strengthening your credit score. You must only borrow the amount that you can repay on time. Otherwise, it will adversely affect your credit score.
- Lenient Eligibility Criteria: Meeting the eligibility criteria for a personal loan is not so hard. You should be an Indian resident with a regular source of income. You should be between 25-60 years old at the time of loan maturity and have a good credit score.
- Substantial Loan Amount: Many lenders offer a substantial amount for a personal loan. Check with your lender about the loan limits they offer.
- Hassle-Free Process:The documentation process for a personal loan is hassle-free. Only a few documents are required, and you can easily complete the process online. Once your application is approved, you get the entire amount in your account within a day.
- Tax Benefits: If you take a personal loan you can also get additional tax benefits. When you use the personal loan funds to start your own small business, you can also claim tax deductions under Section 24(b) of the Income Tax Act of 1961. You will be able to claim a tax deduction of Rs. 2 lakhs per year for loan interest paid. To claim the tax deduction, you must demonstrate to the appropriate agencies that the loan amount is being utilized for that specific purpose.
We hope that you now understand the importance and benefits of taking personal loans for any purpose with only a few documents required and no collateral. Also, the interest rates are comparatively lower than those on credit card loans.
However, keep in mind that it is your debt, so you must repay it on time; otherwise, you will face financial difficulties that may take years to resolve. Also, you should always review the terms and conditions before applying for a personal loan.
Lastly, if you need help with your finances, you can always ask for help from experts like Piramal Finance. They will guide you on when and how to apply for an instant personal loan. They can even suggest whether a business loan or a personal loan would be more beneficial.