Personal Loans are unsecured loans offered by banks, Non-Banking Financial Companies & other lenders to individuals who are in need of additional funds. While a Personal Loan can be used to meet numerous needs of a financial nature, right from bearing the expenses of marriage to purchasing home appliances, for purchasing business assets to sponsoring the higher education of one’s child, a vast majority of people use Personal Loans to meet financial emergencies.
Of course, this is due to some well-founded reasons, the most prominent of which are discussed below:
More often than not, Personal Loans are easily available to individuals who meet the bare minimum eligibility criteria which are:
It is rather convenient to meet these needs, making it a go-to option to Apply for a Personal Loan at the onset of any financial emergency.
A Personal Loan does not warrant any security or collateral to be pledged by the borrower. Rather, it is given on the basis of the borrower’s ability to repay the amount, along with their credit history. Since there is no security involved, verification and documentation criteria are limited. This results in expedited processing time, thereby ensuring that the loan is readily available, making them an ideal pick for the fulfilment of urgent financial needs.
While new customers of a bank or NBFC can expect to get their Personal Loan application approved within 72 hours of applying, existing customers or those who are pre-approved can get the loan processed in less than 24 hours of time.
This is one of the features that help Personal Loans gain an instant edge over all the conventional loan types.
The present day digitised banking (net banking) has made it incredibly quick and easy for banks to disburse the Personal Loan amount in the account of the borrower within a span of just a few hours.
One might argue that Personal Loan Interest Rates are rather high, ranging from 11 to 22% per annum and in some cases even higher. However, when compared to Credit Card advance wherein the interest levied may range anywhere from 20% to a whopping 42% per annum, a Personal Loan proves to be more cost effective. Hence, it is better to opt for a Personal Loan over swiping a Credit Card for emergencies. Moreover, most Credit Card providers charge an additional fee on cash withdrawals from ATMs, which make it even more redundant when it comes to meeting an unexpected financial obligation.
When one uses a Credit Card to meet any financial needs, they are supposed to pay off the amount by the due date of the next billing cycle, lest the outstanding amount will accrue a high interest. In case of a Personal Loan though, one can easily repay the amount in the form of monthly instalments over a period of 1 to 5 years, as may be convenient. Not only does this take off the pressure to immediately settle the amount, but it also offers ample time to the borrower to make the necessary arrangements for the repayment without worrying about the mounting interest.
The maximum amount that can be used through a Credit Card is confined to the credit limit stipulated by the card provider. However, when one opts for a Personal Loan, they can borrow any amount ranging from Rs. 50,000 to Rs. 50 Lakhs, depending on their needs and their ability to repay the same.
All in all, an unsecured Personal Loan is a perfect solution to meet your substantial financial needs such as business acquisitions, immediate travel or relocation expenses, etc. In fact, it is one of the primary reasons why Personal Loans have become popular as Marriage Loans, Home Improvement Loan etc.
In case a borrower is not eligible for the amount they need, they also have the option to apply for the Personal Loan with a co-applicant. In this case, the lender considers the income as well as the credit history of both the applicants to determine the loan amount that they’re eligible for. Thus you can procure a higher loan amount than you are eligible for during the emergencies.
To apply online for Best Home Loans in India, Secured Loans and Unsecured Loans, visit MyMoneyMantra, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 7 million+ happy customers since 1989.