Wednesday, September 28

9 reasons why personal loans are becoming so popular in India

A personal loan is an approved amount borrowed from a bank or financial institute that is sanctioned and deposited into your account in a span of 24 hours to a week. A Personal loan is usually unsecured, which means it is not collateralized. You do not have to use any of your assets as security for the loan. With today’s technology, you can instant personal loan apply online from the comfort of your home without needing to visit your bank. The amount borrowed is paid back with some amount of interest until the principal amount borrowed is repaid.

Here are some reasons to consider personal loans for your needs:-

Collateral-Free Loans- You do not have to pledge any of your assets as a security for the loan. You are not at risk of losing your home or vehicle on mortgages if, in unfortunate circumstances, you cannot repay the debt amount. Make sure your credit score and payment histories are in good form to benefit most from a personal loan.

Instant Personal Loans- Apply online for instant personal loans by studying the best personal loan rates in India and applying through their website, which normally comes with an interest and instalment calculator, on which you can type in the amount and get your rates within seconds. Apply online for instant personal loans for fully digital, paperless loan applications in the comfort and safety of your home without visiting your bank. You have everything a tap away, decide on your loan requirements, check if you match everything in the eligibility criteria ( Age between 21 to 60 or retirement age, business personnel, self-employed, salaried individual, minimum net income ), and submit the required documents (bank statements, salary slips, residence proof, and ID proofs) along with your photographs and get your loan sanctioned within a matter of seconds. The loan amount will be debited anywhere from a day to a week, which is another good reason to consider instant personal loans online. Once sanctioned, the processing time of these loans is quicker than other loans such as home loans or car loans.

Utilize For Any Needs- A personal loan can be used for any purpose ranging from medical emergencies, home renovation, or relocation of residence to even buying a new gadget that you have been rooting for months or other large expenses that you can not cover in your salary. Since these loans are not specific, like Car loans which you can only use to buy your dream vehicle or home loans which you can only use to build your home, they do not restrict you from using them for divergent needs.

Consolidation Of Debts- Consolidation of debts is one of the most prominent intentions behind applying for instant personal loans. Debt consolidation is a type of refinancing by combining more than one debt balance into one new loan. Let’s, for example, say you have an education loan, a car loan and a home loan taken in your name, and its interest rate is higher. If you sum it all together, it is a good idea to apply online for an instant personal loan to repay your other loans. This is especially of good use when your home or other valuable assets are pledged as collateral for your other loans that are at the risk of being seized. Consolidation of debts can also help keep your credit score on the top when used efficiently. Make sure to pay back on time and aim to reduce your debts. Take into account that if you have a very poor credit score, getting approved for personal loans can be difficult.

Best Interest Rates- While its no doubt that you do your research for the best personal loan rates in India before applying for one, check the interest rates in different banks or other financial institutes that provide personal loans that would most suit you. Interest rates offered by most banks or other non-banking financial corporations vary from 7.90% per annum and 49% per annum. However, there are a few tips to get the lowest interest rates on your personal loans:

  • Becoming creditworthy-  Make sure your credit scores are buoyed up. Banks and financial institutes provide a cheaper interest rate to individuals with high credit scores. If your credit score is less than 750, then work on increasing your credit score by paying your credit card dues on time, not using more than 30% of your credit limits, apply for credit cards in banks where the prospect of loan approval is higher, avoid ignoring errors in your credit report, maintain good repayment history by paying the full due amount in time and so on. 
  • Repay on time- If you have paid your credit card bills and your past EMI’s on time, you are likely to be charged a lower rate.
  • Use seasonal offers and other such promotions by your bank to avail of their cheaper interest rate. Seasonal offers can save you quite an amount. Make certain to be up to date with promotions and seasonal offers from your bank to benefit from them in time, though this might require time and patience.
  • If you work for a company or corporation of good repute, your bank might provide you with cheaper personal loan interest. Always check with your organization or corporate’s associated bank and look out for the offers they provide their employees and how you could benefit from them. This could differ if you are a self-employed individual.
  • If you are young or middle-aged, a lower interest rate is applied compared to older individuals who are close to their retirement.

You might also want to hire a financial adviser or a bank customer care to help you find the best personal loan rates in India that would best suit you.

The Bottom Line

Personal Loans are a great way to refinance or of great help in times of emergencies. But ensure to pay your debts on time and keep your credit scores high.