Top 10 Reasons to Avail a Personal Loan This Year

Personal loans are a great way to get instant money. You may need this money for a major purchase or to pay off urgent expenses like medical bills. Here are the top 10 reasons that make personal loans stand out from all types of loans.

Top 10 Reasons to Avail a Personal Loan This Year

1. Hassle-Free Documentation

One of the major benefits of personal loans is the less amount of paperwork. All required documentation is done in a digital format if you submit your application online. You can attach the necessary files to your application form and submit them simultaneously. The process does not include any paper at any point. Also, some financers offer a service to collect your documents right from your doorstep.

As part of the application process, banks and other lenders will ask you to provide documents like your ID proof, address proof, bank account details, pay stubs, and tax returns.

2. Quick Disbursement

The funding of a house loan takes roughly three to four weeks to complete. On the other hand, a personal loan is processed within 24-72 hours. So, the best way to meet pressing demands for cash or payments is by taking out personal loans.

To get your loan promptly disbursed, you will need to have a strong credit score and be able to prove that you match the eligibility criteria.

3. No Need for Collateral

Personal loans are unsecured loans, so you do not need to use any asset as collateral. In the case of default or nonpayment of obligations, you will not lose an asset. Because of this, anyone with a stable income and credit history can qualify for a personal loan.

4. Versatility

Personal loans are your best option whenever you need to borrow money for whatever reason. There are no restrictions placed on the end-use of the loan amount by the lenders. That is, without a doubt, one of the most useful aspects of availing of a personal loan.

You can put the money you borrow toward arranging your ideal trip, paying off other types of debt, buying high-end gadgets and accessories, or throwing a flamboyant wedding. You can also use personal loans to pay your bills in a medical emergency.

5. Help with Debt Consolidation

Paying off debt is another major use to which you can put your personal loan amount. You can use this amount to pay off other debts, such as secured loans or high interest credit cards. In addition, personal loans have lower interest rates than credit cards. So, you can repay the high-interest debt with a low-interest financial product.

6. Credit Building

If you are just starting to build your credit or your credit score is poor, getting a personal loan might be a great way to help with both. Since personal loans are available at feasible interest rates, you can take as much or as little time as you need to repay them. When you make your EMI payments on time, it shows on your credit report as stable payment history.

A loan may be a good option, but only if you know that you can afford to make the monthly payments. If the loan’s monthly instalment is too much for you to bear and you fail to make even one EMI, you will end up decreasing your credit score.

7. Flexible Tenure

The borrower-friendly repayment options of a personal loan are a major selling point. The loan tenure ranges from 12 months to 7 years. This way, you can select a term that suits your budget and needs. Generally speaking, the EMI will be less if the loan term is longer. So, you can tailor your monthly expenses to your precise needs by selecting the right loan term.

8. Attractive Interest Rates

The interest rates for personal loans are more reasonable than most other types of loans. So, you may get manageable monthly instalments. In most cases, the interest rate remains constant. As a result, you will not have to worry about your monthly payments fluctuating with the interest rate throughout the loan tenure.

9. Tax Reduction

Personal loans may qualify for tax breaks under Section 24B of the Income Tax Act of 1961. For instance, if the money is used for residential purposes like repairs, rebuilding, or down payments, you can claim a return of up to ₹2 lacs for the interest paid on the loan during that fiscal year. More terms and conditions may apply depending on your specific situation.

10. Better Alternative to Payday Loans

Instead of taking out a payday loan when you need money, consider applying for a personal loan. The interest on payday loans is higher than that on a personal loan. Also, payday loans often have short repayment periods of two weeks or less. The repayment is due on the borrower’s next payday. Often, borrowers struggle to meet the repayment deadline because of the speed with which the loan gets processed. Instead of paying the loan, borrowers refinance them, adding more interest. Thus, the resulting sum of interest is even higher.

Conclusion

A personal loan can be used for anything. But you must repay the loan at some point, so keep that in mind. Borrowing money for personal reasons comes with the extra cost of paying interest.

Want a quick personal loan of up to ₹10 lacs? Apply for a personal loan with Piramal Finance now! Or need some financial advice and assistance to plan your finances well? Check out their other financial articles, products, and services.