There comes a time of emergency when one needs urgent cash. A personal loan would be the best option to get through the crisis. It protects people during crises and allows them to meet their long-term goals. It includes wedding plans, studies abroad, travel, etc.
Before opting for a personal loan, one should be aware of its positive points. It will solve any doubts before applying for a loan. Read on to learn about personal loan features and benefits.
What is a Personal Loan?
Personal loans are a savior during any brief money crisis. They are simple to get and accessible from almost all leading lenders. Whether organizing cash for a wedding, buying a car, or going on a family trip, a personal loan may help people with urgent money.
Paying back the EMIs is simple, and they have plenty of time to do so. Many websites allow people to apply for personal loans online.
People no longer need to visit banks and stand in long lines. A few clicks on a smartphone or laptop are more than enough. All these personal loan benefits help in getting a loan quickly and make it very popular.
Features of a Personal Loan
- Flexibility of use
There is no binding usage in a personal loan. One can use it as and when needed from the time of payout. Banks and NBFCs provide open-ended and closed-ended loans. It means closed funds are used only for the purpose it is taken. Open-ended loans can be used as per the user’s needs. Close-ended loans are car loans, home loans, study loans, etc. A personal loan can be used for medical expenses, college tuition fees, wedding expenses, repaying multiple loans, etc. It’s not like a car or home loan. This financial resource can be used for any necessity without limitations. It’s an easy way to get out of the money crunch.
- Easy payout
Getting the personal loan pre-approved is usually instant. One should meet all the criteria when applying for an urgent loan. It will be a plus if the credit score is good. The usual time for loan payout is within 24 hours, or 72 hours at most. The time frame also depends on the lenders. This feature of a personal loan makes it the best bet in an emergency. Moreover, being an account holder in a bank will give the users an edge for online approval.
- Hassle-free payments
Personal loans give an easy way to repay the amount. EMIs, post-dated cheques, bank online transfers, etc, are some of the few methods of paying back. When applying for a personal loan, it is vital to know the payback format. The payback is usually done in equal monthly payments. These are decided before getting the loan. Nowadays, banks prefer monthly payments on a set date. One thing to pay attention to here is that EMIs should be pocket friendly. Otherwise, it will be a needless burden on the finances. If the user chooses a longer payback tenure, the EMIs will be lower, and vice versa.
- Low loan interest rate
Before applying for a loan, the primary concern is the interest rate. The interest rates of personal loans are pretty low in terms of other loans. These attractive rates of interest raise the demand for personal loans. This perk enables fixed EMI for the whole period. Bankers are pushing to bring down the personal loan rate to attract users. It might be the best time to apply for a personal loan for any major cash outflow.
- Income tax perks
The cherry on top feature of a personal loan is the TDS that can be claimed while using the amount. Users can use this amount for building a home or for higher studies. As per the legal books, the benefits can be up to Rs. 2 lakh. The tax benefits call for proper paperwork that shows where and how the money is used.
Benefits of a Personal Loan
- Instant approval
Personal loans come with many perks. One such benefit is instant approval. Instant here means the approval process takes 24 hours. As compared to other loans, it is way too fast a process. A home loan takes four weeks to process. That’s the reason personal loans are opted for in such large numbers.
- No security needed
The fact that loans are provided without security is one of the main reasons more people choose them in this nation. People do not need to provide security, assets, or guarantors to be approved for an unsecured loan. It is not the case with secured loans taken out for vital purchases. The capacity to pay back the loan within the allotted time is the sole factor considered when granting a loan.
It is the best benefit of a personal loan to be highly versatile. Be it to buy a luxury good, for a family trip, or for home renovation, the user is not stuck to one cause of usage. This particular personal loan benefit makes it all the more famous amongst the borrowers.
- Credit score merit
To be in good standing with both lenders and CIBIL, one needs to have a good repayment history. If the credit score is low, there are chances of rejection of the loan. The credit score rises akin to the user’s payment habits. Never forget to take out a loan that is within your ability to repay. One missed EMI, and the credit score falls. Maintaining a good credit score can be stressful at times. But it is one of the most important features of a personal loan.
- Nominal paperwork
Users are required to present minimum paperwork while applying for a loan. Lenders only require three IDs: address proof, a PAN card, and photo proof. All these can be scanned and submitted online. Not only this, but the process to apply has also become very simple. For ease of use, online applications are now accepted by banks and NBFCs. This unique personal loan feature has made it easy for many rural people to apply.
In today’s scenario, personal loans have very high demand. The above listed are a few of the many benefits of personal loans. There is a loan available for every wish and dream. What’s important is to study the pros and cons of personal loans. One must be thorough with all the knowledge of the loan and go ahead. For further details and assistance, visit Piramal Finance.