Why Taking a Personal Loan Is Beneficial
A Personal Loan is an unsecured consumer loan that is provided to working salaried professionals for their personal use. Such loans are provided by banks and financial institutions to the end consumer without asking them for any security or collateral. This is the reason these loans are also termed as Unsecured Loans. Therefore, these loans also carry with them a relatively higher rate of interest so that the lending institution covers its risk in the absence of any collateral. The rate of interest and processing fees are also a bit on the higher side for this reason.
However, this isn’t to say that personal loans don’t have their benefits. They are ideal if you need cash for a short-term requirement, and can be availed faster online as compared to traditional lenders like banks. Availing personal loans on a digital platform also increases its disbursal rate and reduces the documentation required. Repayment for personal loans is done through fixed Equated Monthly Installments or EMIs.
Availing a personal loan does have its benefits. But be sure to ask yourself the following questions before you apply for one:
- Are you eligible for a personal loan? If so, how long will it take for it to get approved?
- Is this loan absolutely necessary? Will you be able to pay your monthly EMIs on time?
- Are you earning enough to pay for your expenses along with the EMI per month?
Here are a few reasons why availing a personal loan is beneficial:
1. It is unsecured:
As mentioned in the beginning, this is an unsecured loan. Therefore, it is easy to get as no mortgage of assets or guarantee is required for personal loans. If you’re in urgent need of cash, personal loans can really come in handy.
2. Quick and easy disbursal of funds:
Personal loans are offered by almost all banks or financial institutions with minimal documentation and time required for verifying the same. The time taken from application to disbursal of personal loans is much lesser while availing other types of loans is much more time-consuming.
3. Available for all purposes
The winning benefit of personal loans is that it can be used for any purpose, like purchasing electronic appliances, travelling, purchasing a vehicle, planning cash expenses, etc. You need not mention the purpose of the loan while applying for one. If you have an urgent requirement of funds, a personal loan can be one of the easiest ways to get cash.
4. Improves your credit rating:
If you repay your loan and all its EMIs on time, this increases your CIBIL score, which in turn increases your chances of getting a bigger loan in the future (like a home loan, education loan, if need be). Timely repayments indicate that you are financially responsible and that clearing debt is a priority for you, as it should be.
5. Saves you from awkward situations:
We all know the popular saying, “neither a borrower nor a lender be”. This quote is apt when it comes to borrowing from your friends because having to do so can be quite embarrassing. You’re in urgent need of cash, and your friend may not have any on him, or he may not be in a position to lend you money himself. This leaves both of you with awkwardness and embarrassment you can definitely do without, thanks to personal loans.
6. No drastic measures:
As mentioned earlier, availing a personal loan does not require you to mortgage any fixed assets as collateral. That’s what makes it easy to get. Similarly, you needn’t break any fixed deposits or other long-term savings that you or your parents may have kept on your name just because you’re out of options to arrange for cash urgently (especially if the amount required is small).
If you’re looking to get an Instant Personal Loan in a hassle-free manner, you can also head over to KreditBee. It offers Personal Loans in the form of a Salary Advance for young professionals, starting from ₹ 1,000 up to ₹ 3 Lakh and it’s an option worth considering if you’re in urgent need of short-term funds to meet your expenses.