A personal loan is an unsecured loan that is offered to a consumer to meet any of their personal needs, such as purchasing a vehicle, purchasing home appliances, getting married, or renovating their home. It is granted after a thorough examination of your ability to pay, notably your source of income, as well as your credit history.
A processing fee is applied, and the money is credited to your account based on your payment capacity. The loan is paid back in fixed payments, including interest, over a certain period of time. Personal loans are very useful these days. You won’t have to deal with a mountain of paperwork or a slew of formalities. Personal loans are available from the majority of banks and financial organizations. The interest rates are also fairly low, thus consumers frequently use a personal loans to make purchases.
Pros of personal loans
Easily Available:
Obtaining personal loans is not difficult. Almost all banks and financial institutions offer personal loans at reasonable interest rates. In comparison to other sorts of loans, these loans are simple and convenient to obtain.
No agent involved:
You do not need to go through a middleman or an agency to obtain a personal loan. This eliminates unnecessary costs and delays. You can approach a bank or financial institution directly for this purpose.
Unsecured Loan:
An unsecured loan is a personal loan. This loan does not demand any type of collateral security. All that is expected of you is the ability to repay the loan. You are not required to put any of your assets up as collateral or give any form of guarantee. Once the lending institution is confident in your ability to repay the loan, it will be processed.
Less processing time:
Because personal loans are provided without any kind of collateral or guarantee, the time it takes to receive one is also relatively short.
All-purpose loan:
A personal loan is one in which you are not required to indicate the purpose for which you will utilize the funds. You are free to use the funds credited to your account for any purpose. It is entirely up to you to determine what to do with the funds.
Minimum paperwork:
Because none of your assets are mortgaged, obtaining a personal loan does not necessitate asset verification or any other type of proofs and certifications that entail a lot of paperwork.
Schemes & Offers:
A number of banks and financial organizations are constantly introducing specific personal loan plans and offers for professionals such as Chartered Accountants, Doctors, and Architects.
Amount & Tenure:
Personal loans are available in amounts ranging from Rs 15K to Rs 20 lakhs, depending on the bank. The repayment can be done via EMIs, which is a viable option. The length of the loan depends on the amount borrowed and might range from 12 to 60 months. It is usually better to take out a personal loan rather than using a credit card to borrow money because the first one has lower personal loan interest rates.
Cons of personal loans
Qualification Criteria:
When applying for a personal loan, you must have a strong credit history; otherwise, your application may be rejected. For the amount lent, no lender wants a bad debt. As a result, before applying for a personal loan, make sure you have a strong credit history with no payment defaults. It’s best to apply for a personal loan with a bank with which you already have an account or with whom you have a solid relationship. When applying for a personal loan with a new bank or financial institution, you may be required to provide extra documentation and provide references for verification.
Bank Account:
If you want to take out a personal loan, you’ll need to have a bank account. This isn’t always the case with the bank you’re applying to.
Lender’s Risk:
Because it is an unsecured loan and the lender faces a high risk because there is no collateral security or guarantee. If the borrower defaults on payments, recovering these loans can be exceedingly costly and time-consuming.
Conclusion
Above all, If you have a strong credit history and the financial resources to repay the loan with interest, you can easily obtain personal loans for whatever purpose you desire. If you do some research before applying for personal loans, you may be able to get the best deal possible in terms of interest rates.
