The world’s fastest growing economy needs a lot of help to promote the start-ups and businesses that need credit to grow. Similarly, the individuals need access to credit to set up a business and to fulfil their varied aspirations that are a part of such a growing economy. Personal loans which are a part of retail loans under the financial parlance is the need of the hour as one can easily plan to repay with easy instalments. A lot of Banks and Financial Institutions are now offering personal loans to make life better for retail customers.
Unlike the secured loans like home loan, car loan or other loans against property. Personal loans are largely unsecured and do not require any collaterals. These loans serve a variety of purposes including medical expenses, starting a business, fulfilling a dream travel destination and even buying a much-aspired gadget. Banks and Financial Institutions normally do not impose any limitations on the usage of the personal loans and are today being availed by many aspirants as they do not have to depend on guarantors or assets to avail the funds they need. The personal loan eligibility depends upon their own credit history and income sources.
Benefits of a personal loan
While most lenders offer personal loans for usages as per the individual’s needs, they only want the assurance that the amount will not be used for illegal activities, gambling or speculation of any sort and since these are completely unsecured loans the lenders like Banks and Financial Institutions normally charge a slightly higher interest rate than the secured loans to cover their risks associated with the unsecured personal loans. The rates usually range between 11% and 22%.
In order to get the reduced interest rates, one may offer security for the personal loan in the form of an asset like property, gold, insurance policy, fixed deposits or even mutual funds.
Although, unsecured the personal loans though are easier to avail as they require lesser paperwork and only one’s salary/ income and the credit ratings are mainly taken into considerations. In India, personal loans are helping thousands of aspirants every day and they can be used for purposes like:
1. Consolidating Loans:
Personal loans can be used to combine all other loans like credit cards and small personal loans into a single personal loan. This gives the advantage of negotiating better interest rates than what one is paying at the present. A single timely-paid loan also helps in improving the credit score while having too many loans reflects a poor credit record and spoils the credit score.
2. A Big Purchase:
Personal loans are a great way to replace old movables from your home and get new. It lets you buy the coveted gadget which you have been eyeing for some time by paying the seller in cash instead of going for credit card EMI scheme which mostly ends up being a costly affair.
3. Paying for a medical emergency:
A personal loan is a saviour in need of medical emergencies. During a medical emergency, a personal loan can be useful by providing the necessary funds quickly.
4. Improving upon Credit score:
Personal loan and credit score go hand in hand. A good credit score helps you get a personal loan faster and a personal loan which is paid on time with monthly instalments increases your credibility and Credit bureau score. Having a good credit score helps you to get the loans faster when any need be.
5. Funds for Education:
A personal loan gives you access to funds that you need right away. As the lender does not control how you use the money. Apply for an online personal loan in India to get the loan faster once you fulfil the personal loan eligibility criteria. One can use it to sponsor education for self or family.
It is very important to remember that one should only take as much loan as one is able to payback. Do proper research and carefully get the hack of all terms and conditions as well as the best rates before buying yourself a personal loan.
The main aim is to make the personal loan work for you. Fintech like LoansJagat helps you compare the different offing of the lenders so that you grab the best deal keeping in mind your financial capacity and requirement.