A personal loan is one of the important and popular options available instantly to meet your financial requirements and goals. It is an unsecured credit option with no requirement of any security or collateral. You can simply use the option for different purposes like organizing a destination wedding, going on an exotic trip, mitigating unanticipated healthcare exigencies, or renovating your house to upgrade its look.
One of the crucial personal loan advantages is its hassle-free loan application procedure. Apart from this, a personal loan is even more convenient as you can simply repay the loan in the form of pocket-friendly instalments.
Here’s how personal loans function –
A personal loan is like most other credit options. To avail of it, you must approach a lender or bank to submit a personal loan application. After this, you must submit all the required documents mentioned by the lender. After document submission, the bank authenticates the info you provide to make sure it is true and accurate. It even checks your credit before making the loan offer. If you approve the loan offer, the bank lender transfers the loan proceeds to your savings account, and you can use the proceeds according to your requirement. You need to repay the personal loan amount in the form of easy EMIs. The installment is computed based on parameters like rate of interest, loan proceeds and loan repayment tenure.
Also, note that besides regular personal loan deals that take up to 2 to 7 days for processing, there are even instant personal loan deals that may be processed on the same day of loan applications. These are often pre-approved loans that are available to you as per your credit profile. A few examples of instant personal loans include HDFC insta loan, ICICI insta loan, Axis insta loan etc.
Read on to know 5 important reasons for of availing a personal loan –
You must factor in your financial condition before applying for a personal loan. With a personal loan, you can easily fund huge purchases you were initially unable to afford upfront. A few of the crucial reasons to avail personal loan include –
Home renovation – Personal loan is the best medium to pay for your home upgrading or finishing the necessary repairs.
Moving costs – If you do not hold any cash for a local or long-distance move, then you must avail of a personal loan to easily pay for such moving expenditures.
Emergency expenditures – A personal loan, by nature, is low cost, which can be availed to mitigate financial emergencies like funerals of your loved ones or any sudden medical emergency.
Vacation expenditures – The cost of an average vacation might not require availing of a personal loan. However, what if you feel the need to go on a luxury trip abroad? With a personal loan, you can easily fund such vacation trips.
Wedding expenses – Personal loan permits prospective couples to fund big-ticket goods, items or products like the groom’s and bride’s dress, venue etc.
What are the major personal loan benefits?
Hassle-free documentation process
One of the significant benefits of a personal loan is the availability of minimal documentation. In case you apply online, documentation is totally digital then. For this, you can upload the necessary document alongside the application form. The procedure is thoroughly paperless. Few lenders even provide doorstep services for the collection of documents.
For this procedure, financial institutions and banks request you to submit important documents like age proof, address, salary slips, bank account details, income tax returns, form 16 etc.
Instant disbursal
Home loan disbursal takes nearly three to four weeks. On the contrary, a personal loan needs just 2 to 7 days for disbursal. Thus, a personal loan is a prudent financial instrument for mitigating your instant money or payment needs. However, you should mitigate the basic eligibility parameters and hold a strong credit score to avail of the loan disbursement quickly.
Zero need for collateral or security
By nature, a personal loan is an unsecured credit option. Thus, you do not require providing any security or collateral in the case of default or nonpayment of the dues. This specific personal loan feature makes it accessible to all with a regular income source and a strong credit history.
Assists with the consolidation of debt
The next important benefit of a personal loan is its potential to clear off the debts. If you hold debts such as secured loans or any high-interest credit card outstanding balances, you can, in this case, use a personal loan to repay your dues to eliminate all possible liabilities from your financial portfolio. Note that the rate of personal loans is lower as compared to credit cards’ finance charges. So, you must go for a low-interest financial option like a personal loan to repay your high-interest cost debt.
Versatility
When it is about using loan proceeds, there is zero better best than an availing personal loan. Lenders and banks do not impose any restrictions or limitations on their end usage. This is one of the crucial advantageous facets of a personal loan. You can even use the borrowed funds to plan out your dream trip, repay other crucial debts, buy luxury accessories and electronic gadgets, or host a wedding ceremony. Personal loans even assist you in mitigating your healthcare expenditures in times of financial emergencies.
Build a strong credit score
Availability of affordable personal loans in times of need is a good way of building a credit score, particularly if you hold a low score or are new to credit. You can take up this loan option at a reasonable interest rate and repay the borrowed funds in flexible repayment tenure in the form of EMIs. As you repay your EMIs along with the interest constituent in full by the due date, your credit score improves. However, note that availing of a loan as per your repayment potential is important. In case the EMI of the personal loan is unserviceable, and you miss out on any EMI repayment, then this can negatively affect your credit score.
Online service to check application status
Now you do not require to visit the branch to check your personal loan application status. You can check the status easily by visiting the lender’s online site and placing the asked loan details. For instance, suppose you applied for an HDFC Insta loan. Now you just need to visit HDFC bank’s website to know the HDFC bank personal loan status online.