It would be great if we all have enough of money for fulfilling all our life expenses, needs and wants. But life throws at us certain conditions and situations where we need to borrow money whether it be from a private money lender, a financial institution or your friends and family.
However, if you have ever tried to take a loan in the conventional way, then you can understand the difficulties involved in the process. Long application forms, time taking documentation process and then the long wait for the disbursement of the loan amount. Loans have also ruined as many lives as they’ve made. But people still go for it, seeing it as a necessary pathway to get the desired amount. But things have changed with personal loan. Personal loans are the new and advanced way of borrowing which has made the borrowing process easy and comfortable for the common masses.
Understanding Personal loans
A personal loan like any other loan allows applicants to borrow a set amount of money and paying the lender back off the principal amount along with the interest in a structured payoff schedule. What makes a personal loan different from other loans is its “unsecured” nature. The unsecured nature implies that you don’t have to put up any collateral such as your house, car, etc. against the loan. Lenders use personal credit score and other factors to determine the eligibility of the borrower.
Another important point about personal loan is its fast processing and quick disbursal. As the loan is unsecured less documentation is required. As the documentation process decreases the processing time, the verification process ends faster and hence the disbursal is also faster.
Reasons to Get a Personal Loan
Debt Consolidation
Having a number of debts with different creditors can be very difficult to manage. Different debts have different interest rates, and paying all together monthly can be a burden and a stressful thing too. These are the reasons a borrower’s is lost in their debts. More debt can also result in missing payments and paying more on interest over time due to higher interest rates. These things are real points to worry about. Debt consolidation is the option available here to solve this problem. For a debt consolidation you can take a personal loan from any of the bank. Use the money borrowed as personal loan to pay off your creditors. This will leave you with just one single monthly payment to make and that will be against your personal loan.
Consolidation saves your time and money both and is one of the best benefits which a personal loan can offer.
To Start a Business
We all are aware of the fact that business loan is taken to finance a business. But with many of the lenders you need to give a collateral to get a business loan. One more important fact to know about a business loan is that one can’t get a business loan in the initial stage of a business. In terms to get a business loan you need to submit profit and loss statement regarding your business and ITR forms of minimum 3 years. All these things are not possible if your business is in its initial stage. However this is not completely true in case of all banks. But a full proof business plan is a must to be submitted in terms to get a business loan. However, taking a personal loan and using that for your business is one of the best option to finance your business if you are not able to get a business loan. No need to submit your business plan and ITR forms. Even mentioning the reason behind opting a personal loan is not required to be mentioned. And the interest rates of personal loans are generally lower than that of business loans.
To Bear the Expense of your Wedding
Everyone wants their wedding day to be a memorable one. They want it to be in the minds of family members and friends forever. There are many expenditures in a wedding which can’t be avoided such as jewellery, dresses, gifts and many more. All these expenses can’t be covered only with savings and that time you are bound to borrow from family and friends as there are no specific loans for marriage.
But Personal loans have solved this problem for many of the families. As one can take a personal loan to cover not just the wedding ceremony, but also for honeymoon. But before you go for a loan always analyse your repaying capacity.
Medical Expenses
There are certain emergencies and health issues where we need a huge amount of money to be paid on medical bills and medical charges. And we can’t deny from the fact only few of us have that much available with us to pay for it. In these situation every second counts as it becomes a matter of life and death and be can’t afford to delay. In this situation personal loan is the only one option available to help you out. A personal loan is available within a short time and can help you when needed.
Home Improvement
Want to redesign your house, but don’t want to dip into your savings or take a home equity loan or home loan? Personal loans can be a perfect solution. No collateral or guarantor required to qualify for a personal loan. You can apply from any bank which you think is best suited to you and receive the funds in few days only.
Paying off your Credit Card
Purchasing different items using a credit card is always tempting. People can’t resist this temptation and are bound to use it. But the fact is credit card is always a trap, which you realise after you start paying your credit card bill. If your purchase is on EMI then it is affordable but when it is not an EMI it becomes a debt trap. The payable amount will keep on increasing every month as the interest rate on a credit card is 24% to 36% per annum. And hence it becomes a kind of never ending process until you pre close it.
A wise option to pre close your credit card bill is by taking a personal loan. You can take a personal loan and use that money to close your credit card. The interest payable against a personal loan is 16% only which is very less as compared to that of a credit card. Hence it is always a wise decision to close your credit card with a personal loan.
There are many reason to opt for personal loan, the above mentioned are only a few. But before you go for a personal loan certain things should be in your mind and those are- always borrow according to your repaying capacity, and to get a personal loan without any hassle you need to have a good credit score.
