Why is a Personal Loan Better Than Borrowing from Friends?

Do folks need quick funds to pay their health bills? Do people have a house loan down payment due this week? Don’t people have enough cash for their son’s wedding? Do folk have to pay their sister’s college fees next month? We have all been in this situation at some point. Getting financial help from family and friends is well-known in Indian culture. Most people believe that taking cash from friends or family is OK if they return it as quickly as possible. Also, it is faster and simpler than getting a personal loan. Yet, they must be aware that money has the power to create or ruin any ties. If people think about it, they will find that asking banking firms and getting a loan offer various perks. This article tells why a personal loan is safer than taking one from friends and family.

Reasons Why Folks Must Think about Getting a Personal Loan

You now have more lending choices

A personal loan can be taken from a bank, online lender, credit union, or instant loan platform. This gives people a broad range of choices to select the best one for their needs. They can be sure that many formal lenders are ready to lend them money based on their eligibility. When it comes to lending from family or friends, a person may not know who can assist them financially.

Personal loans have well-defined terms & conditions

Interest rates, repayment period, & late fees are all fixed conditions and terms of personal loans. It’s a legally binding deal that provides a person with many details about what to intend as they pay off the debt. This makes future planning more accessible. Also, once a person has paid off the loan, they have no duty to the lender. The loan terms may be vague when taking money from a personal link.

Lending from friends can strain a relation

Lending from friends and family can cause a rift. There are other dangers linked. If a person does not return the debt, their relationship may suffer. It’s also worth noting that people who can’t pay back their friends may have to turn to more costly means of getting money in the long term.

Personal loans may assist in the building of a credit history

A personal loan might be a terrific method if a person wants to boost their credit. Individuals may build a strong credit history by asking for a loan using a lending app and completing their payments on time. This may enable a person to qualify for lower interest rates on future loans & lines of credit. Taking money from relatives or friends doesn’t offer the same benefits.

People are free to utilise the borrowed cash for any task

Personal loans may be used for many things, including debt relief, financing an enormous buy, or making home repairs. Personal loans are a flexible choice for folks because of their flexibility. The person is also not mandated to inform the lender where the person intends to spend the taken funds. When borrowing from friends, a person may feel more compelled to inform them of where and how they intend to spend the money.

One lender can provide a person with the precise count folk need

Asking for an instant personal loan makes more sense if folks need a big chunk of cash. With a personal loan, people know that the bank can provide the precise sum of money they need. Borrowing from friends may result in them being unable or reluctant to lend you a large sum, and a person may find taking from others further complicates their economic situation. People may also ask for an instant personal loan, which allows them to pay interest only on the cash they use, giving it a more effective method to get credit.

Eligibility to Apply for a Personal Loan 

The criteria for getting a personal loan differ for each person: 

• One must have an excellent CIBIL score of over 700.
• To live in a city, the person must have a monthly income of at least INR 25,000. 
• The person has to be between 21 and 60 years old. 
• To get a personal loan, the person must have worked for at least three years before.

Papers Needed to Apply for a Personal Loan 

While various lenders may request a wide variety of papers during the loan process, the key ones that most of them might ask for from people are given below:

• Valid Identity Proof
• Authentic Address Proof
• Proof of Age: people often do not need to provide distinct proof of age since ID and address verification papers include the date of birth.
• Form 16 or the most recent payslip or bank account records reflecting the credited wage for those who are salaried
• For self-employed people, the most recent six-month bank proof for the primary account, IT filings for the last two years, P&L accounts, and balance sheets.
• The person must complete and submit the loan form for the instant personal loan by the lender and the required papers. On the lender’s website, one may print the form as well.

Final Word

Taking out an instant personal loan from a respected banking firm is a better alternative than taking cash from family and friends. If people need cash quickly, they may use pre-approved personal loans. Different banks and NBFCs give loans at low-interest rates. It is offered with little paperwork. Based on the person, the loan sum might be sent to their bank account in ten minutes to 24 hours. In the absence of a pre-approved offer, a person may apply for a personal loan, which can be paid in 24 hours – 7 days, based on the bank’s loan approval method. It is best to do an extensive study before taking out a loan. Pick the lender prudently, and study the loan contract carefully to prevent future surprises.

Piramal Finance has similar blogs for folks to help them get an instant personal loan. Give the blogs a read and check out the other services they offer.