12 Benefits of Personal Loan

What do you do when you suddenly need money for an emergency like hospitalisation or when you have been delaying some necessary repair work in your house due to a cash crunch? A few things that are not very urgent can be delayed, but there are many things for which we need to arrange financing. Availing a personal loan in such instances has many benefits, and it is a great option for arranging money in a short time. The many benefits of a personal loan, such as quick disbursal, less paperwork, flexible repayment options, etc., make it an ideal choice for anyone needing financial assistance. The best part of a personal loan is that it has no specific end-use, so you can use it for any purpose you want to, such as covering wedding expenses, paying school or college fees, going on a holiday, buying a new car, medical emergencies, etc.

Benefits of Personal Loan

Personal loans are unsecured and can be used for various purposes. It is easy to get a personal loan, and most banks and financial institutions offer personal loans to customers. Some of the benefits of getting a personal loan are:

1. The Process is Hassle-Free and Requires Less Documents

   The entire process of obtaining a personal loan is quick and can be completed online via the lender’s website or app or by visiting a local branch. A big advantage of personal loans is that they require minimal paperwork and documentation as compared to other loans. All you would need are ID proof, income proof, and address proof.

 

2. Almost Instant Loan Disbursal

   A great benefit of a personal loan is how quickly you get the money once your loan is approved. It is possible to get funds within minutes of loan approval, which makes it easy to deal with emergency situations such as surgeries or hospitalisation.

 

3. You can get a Loan Without Any Collateral

   A significant benefit of personal loans is that they do not require any collateral, as they are unsecured. This means you will not have to pledge your house or car to avail of a loan and risk losing a valuable asset.

 

4. Lump-Sum Funding

   With personal loans, you get the sum of money you need upfront and lump-sum, unlike a credit card or line of credit. You are then free to use the amount as you wish, whether to pay off the contractor for house repairs, go on a family vacation, cover your child’s college fees, or for any other reason.

 

5. No Specific End-Use of the Funds

   While a home loan or auto loan has specific uses and cannot be used for any other purposes, a personal loan’s advantage is that it does not have a specific end usage and so you can use the money borrowed for almost any purpose be it going on your dream vacation or expanding your business or anything else. As long as you use it for legal purposes, it is allowed.

 

6. Tenure Flexibility

   This benefit of personal loans comes as a blessing for most people as it allows borrowers to choose their loan duration as per their repayment capacity. You can use an EMI calculator to find the instalment amount based on your preferred tenure and the prevailing interest rate. You can opt for a longer tenure when you want to pay a lesser EMI amount each month, depending on your budget.

 

7. Easy Repayment Options

   Paying off a personal loan is also easy and flexible. Usually, a set date is decided before the loan has to be repaid, but you have the freedom to choose your loan tenure, and the terms of repayment are easy going. Sometimes, if you are able to arrange a large amount of money, you may also have the option of paying off your loan earlier.

 

8. Helps To Improve Your Credit Score & History

   When you obtain a personal loan, you will need to pay regular and timely EMIs to pay off the loan. Such regular repayments and no defaults will help you maintain a high credit score and improve your credit history. With a high credit score, availing your next loan will become easier, and you can also get it at lower interest rates as you have proven your creditworthiness.

 

9. Interest Rates are Low & Competitive

   Personal loans offer competitive interest rates. When your credit history is good, and you have a stable income, it is possible to get loans at lower interest rates. They are also more affordable than credit card loans or charges.

 

10. Easy to Consolidate Debt

    If you have multiple debts or loans, you can take out a personal loan to pay off all the debt collectively using that single loan. Then, you only have to repay one loan and do not have to worry about multiple monthly repayments, and this can also help you reduce your interest costs.

 

11. Easy and Quick Access to Money

    As the disbursal time for a personal loan is very short, you get quick and easy access to money when you take out a personal loan. This helps you deal with any unforeseen events without worrying about money. This advantage of personal loans makes them a popular choice amongst many borrowers.

 

12. Interest Rates are Lower Than Credit Card Interests

    Another benefit of a personal loan is that the interest rates on such loans are generally lower than the interest charged on credit cards. The average interest rate on a personal loan is around 12%, while the same on credit cards is around 20%. Also, it is possible to qualify for higher loan amounts than your credit card limit. This makes it more cost-effective to obtain a personal loan to pay off any big expenses.

 

Obtaining a personal loan has never been this quick and easy!

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Conclusion

Personal loans offer a convenient and flexible financial solution for a wide range of needs. With their quick disbursal, minimal paperwork, and competitive interest rates, they can help you tackle unexpected expenses, fund major life events, or consolidate existing debts. By understanding the benefits and carefully considering your financial situation, you can make an informed decision about whether a personal loan is the right choice for you.

Remember, responsible borrowing is key. Always ensure that you can comfortably repay the loan on time to maintain a healthy credit score and avoid financial stress.