Reasons Why You Should Apply for a Personal Loan
Personal loans are unsecured loans that are given without collateral. They give people a free hand in emergencies and don’t tell them how to spend the money. Many people have turned to personal loans over the past few years instead of borrowing from family and friends. People take out personal loans when they don’t have enough money during a tough time.
A personal loan has several other benefits. People don’t have to wait a long time. Also, even though the interest rate on unsecured personal loans is higher than that on secured loans, it is still less than what private moneylenders charge. One of the best things about personal loans is that they can be used for many different things.
So, it is very crucial to know why people apply for personal loans and what the eligibility is for these kinds of loans.
Reasons why people apply for personal loans
Debt Consolidation
One of the most common reasons to use a personal loan is to pay off other debts. When people apply for a loan, they pay off other debts, like credit card bills. They only need to pay monthly installments. By keeping track of all the debts, anyone can figure out how long it will take to pay them off.
Medical Emergencies
Lifestyle issues sometimes lower the quality of life. So people need medical treatments. All insurance plans do not cover all diseases and treatments and require out-of-pocket payments. In these cases, an instant personal loan is a blessing for everyone. Anyone can use a personal loan to pay for medical costs or treatments.
Funding Holiday
The routines of daily life can cause a lot of stress. This is why it’s necessary sometimes to take a break. Going on a trip or vacation can bring great joy and refresh a monotonous life. Sometimes, it can be expensive to plan a vacation. That is why no one can take that break. To get rid of this, anyone can apply for an instant personal loan to pay for their dream vacation.
To expand business
Many companies provide small company loans as personal loans to assist small and medium firms in growing. For example, if anyone already has a business that brings in at least Rs. 15,000 per month, he can apply for a personal loan to grow it without putting up any collateral. Also, he won’t have to follow any rules about spending money!
Home improvements
It’s common to get a personal loan when anyone needs to fix something in their house or wants to change its appearance. People can apply for a personal loan without putting up any collateral. They can pay back the amount in small, affordable EMIs instead of paying a large sum all at once. This way, personal loans help everyone with their home improvements.
Getting a higher education
Traditional education loans have a lot of rules and conditions. Some loans require admission to a specific college. Also, they have strict rules about how to pay them back. It takes years for students to get out of debt. A personal loan is always the best choice because students don’t need to meet any requirements to get one.
Wedding
In India, it’s common to have a big wedding. People usually don’t worry about spending on their own or their children’s weddings. Often, they even borrow money to pay for their dream wedding. A wedding also has some unplanned costs. So people can take a personal loan without putting up any collateral.
Shifting and relocating
The costs of moving to a new place are a new burden on the household budget. If anyone is not careful, the shifting costs can leave them without enough money. This is a great time to use a personal loan.
Obtaining a personal loan is a simple way to cover all moving expenses.Since there are no rules about how to spend money, the borrower can use it.
Personal Loan Eligibility Requirements
Before applying for a personal loan, applicants must verify their eligibility. They can find all of this online with just a few clicks. Most loan requirements are based on the borrower’s work history, which can be divided into two main groups.
| Particulars | Salaried | Self-Employed |
| Age | 21 – 60 years | 21 – 65 years |
| Minimum Income | Rs.15,000/month | Rs. 5 5 lakh p.a. |
| Loan Tenure | 12 – 60 months | 12 – 60 months |
| Maximum Loan Amount | Rs.40 Lakh | Rs.40 Lakh |
| Co-applicant | Not mandatory | Not mandatory |
| Employment Type | Employees of private companies and government offices | Self-employed persons |
| Employment Details | 2 years work details; 1 year with the present company | For the self-employed, there are not many restrictions, but business owners need to submit their minimum income receipt. |
| CIBIL Score | 750+ | 750+ |
| Residential Status | India |
Documents required to apply for a personal loan
To approve a personal loan, lenders need some paperwork.
| Identity/Age Proof (Any one) | Ration cardPAN cardPassportAadhar cardDriving licenceVoter ID cardBirth certificate |
| Address Proof (Any one) | Aadhaar cardPassportRation cardUtility billsDriving licence |
| Income Proof (Any one) | Last 6 months’ bank statements/salary slipsForm 16Bank passbookCopy of pension payment orderIncome tax returns |
| Photographs | Passport size photographs |
How to get a personal loan with low interest rates?
Credit scores matter
With a credit score of 750 or higher, it’s easier to get a personal loan. To get a personal loan on time, everyone should keep their credit usage below 30% and not apply for credit cards.
Repayment History
People should always pay their loan payments on time. It makes it easier for lenders to negotiate interest rates.
Compare personal loan rates
Compare personal loan rates and lenders online based on eligibility and requirements. Lenders offer personal loans with low interest rates during certain times of the year. People get a better deal on their loans.
Wrapping-Up
A personal loan can assist a person in meeting his or her short-term financial needs.They pay for major costs like debt relief, emergency needs, and more. These loans are paid back every month. The borrower’s situation could make it take longer.
So, personal loans are one of the easiest ways to get cash quickly because the loan term is shorter, there is no collateral, and there is no paperwork. Best of all, anyone can try to get it. People in India are slowly taking out more personal loans because they are easier to get and because more people are learning about money.
If anyone needs to know more about personal loans, they should visit the Piramal Finance website to explore their products and services.