Understanding Personal Loans And The Benefits

Your financial needs may occur without any forewarning, and you’ll get into situations where you’ll find yourself in need of some extra funds. Let’s take a look at what is a personal loan & its benefits.

Personal loans can help you finance most major purchases, from an engagement ring to home repairs, often at a lower interest rate than paying with a credit card.

And if you’re stuck with a bunch of high-interest credit card debt, you can take out a personal loan to consolidate the balances and lower the overall APRs, thus removing the hassle of juggling too many monthly payments at once.

But like any kind of financial product, personal loans have trade-offs, including fees and interest rates. Consumers should think carefully before applying for loans since they can impact your credit score and overall financial health.

So if you’re wondering what is a personal loan? Let’s take a look at it. Personal loans are a form of installment credit. Unlike a credit card, a personal loan delivers a one-time payment of cash to borrowers. Then, borrowers pay back that amount plus interest in regular, monthly installments over the lifetime of the loan, known as its term.

Versatile, easy to avail, hassle-free application process – there are numerous advantages of personal loans. A personal loan is a great way to finance your emergency requirements. Be it an unplanned medical condition or a big-ticket purchase, a personal loan can finance all these requirements.

Let’s take a look at some of the top benefits of personal loans –

Quick Approval

By quick, we mean within 24 hours in most cases!

As compared to 3-4 weeks for home loan processing, a personal loan takes much less time. As a result, they are the best bet for meeting your urgent cash or payment needs.

If your credit history is good, then lenders will not have a problem approving your loan application.

No Need for Collateral

Personal loans are unsecured, which means that you don’t have to provide collateral to avail of them. This is why it is easier to avail of personal loans as compared to other loans such as home loans, auto loans, etc.

Versatility

Be it for an iPhone purchase, a Swiss holiday, or for home refurbishing, a personal loan will be helpful without being limited by the use case.

Additionally, a single loan can be used for multiple purposes and is not limited such as home loans or auto loans. This flexibility is one of the reasons why personal loans are so popular today.

Builds Credit Score

If you have a low credit score or are new to credit, a great way to build your score is by availing of affordable personal loans and repaying them on time. As you pay your EMIs on time along with the pre-decided interest rate, your credit score will increase.

Minimal Documentation and Easy to Avail

One of the biggest advantages of online personal loans is that the documentation requirements are minimal. Loan providers require just three documents which can all be submitted online. Not only this, but the application process is also quite simple keeping in mind customers’ convenience.

Personal loans are one of the most sought-after loans today. So, if you’re wondering to get one, first understand what is a personal loan and get into the numerous advantages of getting one. And most importantly, weigh all your options.