Reasons to Opt for a Personal Loan to Finance your Big-Ticket
Every second person nowadays has one or more basic financial needs. These needs range from medical to educational. Unfortunately, not everyone is financially strong enough to meet these needs. Here’s where an unsecured personal loan comes to the rescue.
Most people in India belong to the lower and middle classes. They cannot afford to send their children to expensive colleges or universities because of their financial situation. Such people are unlikely to be able to keep any collateral or mortgage their jewellery or homes. Unsecured loans for personal use help them in such a hustle.
All about personal loans
A personal loan is simply an unsecured loan to meet big or small financial needs. Such loans are unsecured and accessible. It means that no collateral is required to obtain such loans.
They are easy to obtain. But their repayment can be quite challenging. This is usually because a personal loan or time loan comes with a higher interest rate too. Most people are compelled to use their entire savings to repay them.
However, every loan facility has huge benefits, too, just like this one. Let’s quickly take a look at them.
Why should one consider opting for personal loans?
- Education:
Opting for a personal loan can help finance higher education. Most students in India aspire to study abroad. But they do not have the resources to fulfil this dream.
Again, obtaining other loans may require a lot of paperwork. Some families can’t even afford to mortgage anything. That’s where a time loan, direct loan, or personal loan comes in handy. It is the best way to finance higher education for students.
2. Medical crisis:
Medical emergencies do not ask for permission. People may encounter accidents or other health-related issues. Usually, hospital bills are very high. Everybody cannot bear treatment charges, medicine bills, ventilator and ICU charges, and so on.
But no one can ignore them too.
A personal loan is the ultimate solution to this problem. It takes no time to process. It is also the best way to save someone’s life.
3. Takes lesser time to sanction:
Loans usually get sanctioned within 1 business day to 1 week. Also, they require a minimum number of documents to be submitted. A personal loan is less complicated and more convenient to obtain than other types of loans.
Nobody wants to wait for days and months to get his loan approved! This is what makes such loans so beneficial.
4. Simple eligibility criteria:
People aged 21-67 can easily avail of these loans. One does need to be an Indian resident to avail of them.
However, one must have a minimum CIBIL score of 750 to avail of a personal loan. One should also work for an MNC (Transnational Corporation) or a private or public company. Possessing a good credit reputation would be ideal.
5. Purchasing necessities such as cell phones:
Most people buy appliances like mobile phones, fridges, and desktops on EMI or in instalments. Most families prefer to go for expensive products despite having less money.
Where would the money come from? The answer is personal loans. One can avail loans to buy the necessities of life too. The repayment would be done in instalments. This becomes an additional advantage.
6. Can be managed under the debt-consolidation scheme:
Debt consolidation is the process of conglomerating or merging several loans to give birth to a new loan. The interest rate is fixed monthly. It generally gets lower on this loan.
This saves the borrower from paying the EMIs on multiple debts. This process is generally employed when the loan’s interest rate has increased.
7. Wedding financing:
Personal loans help manage big and small weddings. It is often seen that fathers spend a lot on the studies of their children and other household chores.
This comes as a financial burden because marriage is also an essential concern in India. Again, personal loans come as saviours. This loan covers everything from the wedding to the reception. Quick approval is also a plus.
8. Enjoying a vacation:
Unsecured loans can be obtained to enjoy dream holidays too. From the Maldives to Mauritius, these loans have a solution for everything.
What is a personal loan not for?
- Investment-related activities are a big no-no
- Buying properties like land. In such a case, one can opt for construction loans
- For establishing businesses or startups
- Paying tuition fees
- Managing basic livelihood
Issues with personal loans
Personal loans have some issues, too, such as
- Higher interest rates: Most unsecured loans are disbursed at very high speeds. These also increase if the tenure is long. This can be harmful to the credit scores of the borrowers if they are unable to repay.
- Damage to the credit image: One may face serious sabotage to their credit image if they do not repay their loans quickly. Thus, it is essential to apply at own risk.
- A penalty by the lender: Lenders may impose serious penalties or give threats if the terms are not met.
- Unnecessary debt: Unsecured loans add to one’s debts. These can lead to stress and anxiety. If the amount is high, there is a chance one needs to pay off the debts with all their savings.
Conclusion
One should try personal loans if one belongs to a lower-income family. It has many benefits. The most important is its quick disbursal. However, it has some potential risks, too. One should keep these in mind before applying. Also, visit Piramal Finance to read more blogs like this or to avail of financial help.