Personal loans have gained remarkable popularity over the years. Today, people are aware of their benefits and use them for several reasons.
Besides, with numerous lenders out there, the race to lend is fierce. The result: competitive terms and instant approvals.
In the current credit landscape, you can avail online personal loans from the comfort of your home through a smart device. Moreover, it takes less than five minutes for your loan to get approved.
However, before you avail of a personal loan, it is important to learn about the eligibility criteria and the general terms and conditions associated with them.
You must opt for a personal loan only once you develop an in-depth understanding of what it entails.
A steady and secure future is what every one of us dreams of, but the rising cost of our lifestyle makes it an uphill task. Lifestyle cost can be defined as the daily amount that we spend on our necessities and luxuries.
Even if you cut out the luxury spending, you will discover that the amount that we need to survive is soaring rapidly. In today’s scenario, it is difficult to save meaningfully on an ongoing basis.
Even though the money spent on maintaining a particular lifestyle varies from one person to another, there is no denying that financial emergencies can arise without warning. You need options when faced with dire situations involving health, education, loss of income, and so on.
Presently, there are enough financial support options available in the market that one can consider. A commonly used financial tool by almost everyone these days for emergency funds is credit cards.
Most stores accept credit cards, but the drawback is their sky-high interest rate. Credit cards come in handy for small purchases, but they are not the best choice for big ones.
With high-interest rates, people find it increasingly difficult to pay off the principal amount and end up paying only the minimum due. Chances are, over time, you will end up paying more interest than the principal itself.
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Even if you cannot clear the entire outstanding on a given month, the lender will charge you a high rate of interest on the outstanding amount. With time, it accumulates into massive debt.
When it comes to affordable and instant sources of funds, online personal loans are the best choice. Of course, it would be an entirely different story if someone lends it to you without any interest, but that is not always the case.
The solution – personal loans! They are flexible and can be used for any purpose. No lender is ever going to question your use of the fund. It can also be paid back with relative ease, as the interest is lower when compared to credit cards and overdrafts. Personal loans come with several advantages.
Let us look at the top benefits of personal loans.
6 Benefits of Personal Loan that You Need to Know Today
1. Minimum Processing Time
Personal loans come with minimal processing time, making them a convenient option. The short turnaround makes it an ideal choice when the need for funds is immediate.
The application process is (mostly) online, and it only takes a few minutes with minimum documentation requirements. All you must do is ensure that your credit profile matches the eligibility criteria.
2. Instant Disbursal
An instant personal loan gets disbursed once your application is approved. It takes less than 10 minutes for the money to be credited to your bank account. This is why personal loans are often referred to as the savior when there is an emergency need.
However, if there is an error in documentation or missing information, it may take a little more time. It is, therefore, vital that you are extra cautious about the application process. This caution ensures that you meet your requirements with zero hassles.
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3. Distinct Use
A personal loan’s best feature is that you can use it for any purpose, from a necessity to luxury, with no questions asked.
Be it weddings, medical emergencies, dream vacations with friends, or buying a gadget – when the need is urgent, personal loans come in handy every time.
4. No Requirement for Collateral
Unlike other loans, you do not need collateral with personal loans. It means that you need not pledge collaterals such as gold or house. The no-collateral policy makes it easier for anyone to get a loan provided they meet the lender’s eligibility criteria.
5. Easy Documentation
The quick processing time and minimal paperwork make personal loans feasible when there is an emergency. All you need is your ID, address, and income proof; and you are all set to apply for a personal loan.
If you have these documents scanned and ready on your smartphone, the whole application process takes less than a few minutes. Most online loans today take the 100% paperless application route.
6. Pocket-Friendly Repayment
Personal loans have a pocket-friendly repayment schedule if the borrower has an excellent credit score. The rate of interest you pay on a personal loan is directly proportional to your credit score.
It means a good credit score attracts less rate of interest. Generally, the tenure of a personal loan is between 12 to 60 months.
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Must-know things Before You Opt for a Personal Loan.
Personal loans are easy and convenient but never ignore the associated risks. Here are a few tips to steer clear of possible hurdles.
The credibility of the Lender
Numerous financial institutions offer personal loans at attractive rates. A tempting offer that is too good to be true can force you to commit a horrible mistake.
You must be extremely mindful of the promises that lenders and their representatives make. Veer towards government-recognized lenders to remain on the safer side.
Know the Exact Rate of Interest
Interest rates are a luring factor when it comes to personal loans. Flat-rate offers can sometimes be misleading. Make sure that you learn the exact rate of interest charged on your loan and the amount it sums up in your EMI.
Learn the Prepayment Details
Closing your loan early through part payments saves money that you would otherwise pay as interest on the principal.
However, some lenders charge a prepayment fee, which can be steep. Before choosing a loan, ensure that you go through the pre-closure clause in the terms-and-conditions section.
Beware of Hidden Charges
Hidden charges can be hard to spot unless you look closely. From service fees to insurance fees, there can be several hidden charges. Go through them carefully before choosing a personal loan.
Take Away
Thorough scrutiny can be a tiring and time-consuming affair, but in the long run, this effort will protect you from unnecessary headaches. Be a wise borrower.