Personal loan can further be divided into various types like personal expense loan, education loan, house renovation, paying old debts, medical bills and even planning for the dream vacation with entire family. No matter for what reason you require Personal Loan, you will always get the best deal. For better loan treatment from the lenders, you can specify your requirement to experts who will assist and guide you on the right loan and other factors like interest rate and repayment options. Even when you earn less, you get much more flexible with the personal loan to manage your expenses that are critical in your life and wish not to compromise on it due to no cash.
Whatever the reason you may have applied for a loan, you suddenly may find yourself realizing that this financial aid wasn’t sufficient enough. However, if you still continue to face a financial debt after that, then you will be required to take additional steps to ensure that it doesn’t become worse.
Out of all the options that are available, the personal loan is most favorable options. Here are a few reasons why:
1. No extensive documentation
A personal loan can be used for any financial requirements. There is no fixed requirement wherein this loan can be used for a specific purpose alone. Like any other loan application, one would need to submit a certain set of documents. However, these documents that need to be submitted include a standard set of proof of identity, proof of residence, proof of bank statements, and photographs. Additionally, one would also need to submit salary slips or income proof based on the status of the employment. As you can see, these documents are simple and need not require any additional running around to procure them.
2. Lower personal loan interest rates
The financial market has expanded to include specialized loans that can be used for specific purposes. Some of these loans include business and even home loans that can be used for specific purposes. However, when it comes to repaying this amount, one may find it hard to repay the amount with the given interest on a monthly basis. This would be financially draining especially if the tenure of the lasts more than 8 to 10 years. On the other hand, the personal loan has a shorter tenure, with a lower interest rate. Comparing the personal loan interest rates to the interest rates of these loans in accordance with the tenure, the interest rates for the personal loan are comparatively lower. Using this loan, one can pay off the pending debt, and yet continue to pay off the interest at a lower rate.
3. Processing time is short
As mentioned earlier, the document requirements for the personal loan comprise a standard set. As a part of the application process, these documents will need to be verified. Since there is not many documents, the processing time to verify these documents will be short. Thus, it reduces the time you will need to spend running around to ensure that your application is well approved.
Right from the personal loan interest rates, document requirements, and processing time, there is other benefits associate with the personal loan. Thus you can see why this loan makes for the perfect choice to get you out of your financial debt.
Factors to Consider When Opting For a Personal Loan
When it comes to opting for financial help for any financial condition, the personal loan makes for an brilliant option. No doubt, by now, you would have been bombarded with offers from different banks and financial institutes offering you only the most excellent in terms of personal loan interest rates, repayment tenures, and other comparable factors. While it may be simple to believe that these offers are tailor-made to suit your requirements, there are specific factors you require to consider when opting for a personal loan.
If you are thinking of borrowing funds, especially through the personal loan, here are a few factors you will need to consider before you begin the application process:
Personal loan interest rates
As enticing as low-interest rates may be, you must not fall for them. When opting for a personal loan, do check the interest rates. Is it based on flat interest rates or a reducing balanced basis? Normally, flat interest rates are offered at lower rates. However, that doesn’t mean, you will end up paying less. Always opt for the reducing balanced basis when opting for a personal loan.
Apart from the personal loan interest rates, there are other charges you will need to be aware of. The processing fee is one factor you need to consider. Normally, a bank will consider a charge of up to 1 to 2% of the loan amount as a processing fee. Prepayment fees are also another factor that you can consider. By prepaying the loan, you can save on the absolute interest cost. However, this should only be considered if you have a guaranteed increase in income. If you fail to pay the EMI’s installment on time, you will need to pay extra. Keep in mind, lower the fee, the better for you.
Consider your needs over eligibility
If you need a fixed amount of funds for a short-term need, stick to that amount. While it may be convenient to borrow more, it is safe to stick to the amount that you require. You must understand, although a personal loan will provide you with funds, you still need to repay back the borrowed funds with the added personal loan interest rates. You do not want to pay interest for unnecessary funds you don’t need. Borrow only as much as you require and not more.
Shop for Better Rates
Do shop around for different rates. Avoid applying at an institute just so you can check their rates. This will lead to an inquiry on your CIBIL score which in turn can affect your credit score. You can contact their customer service to enquiry about theirs.
A personal loan is a great way to get financial aid in the hour of monetary crunch. They are multi-utility loan and can be used for various purposes like financing wedding, child’s education, vacation, home renovation etc. They can be used for meeting out any personal needs like paying for credit card bills or other utility bills. The borrower holds the entire jurisdiction to use the loan amount and how he wants without being answerable to the lender.