Personal loans are becoming increasingly popular, especially among the younger generation because they are one of the easiest and fastest ways to get credit in India. A personal loan is an ‘unsecured loan’ which is suitable for fulfilling short-term financial requirements and it can be taken from a bank or a non-banking financial company (NBFC). The best thing about a personal loan is that unsecured and thus, no collateral is required. An individual’s employment record, credit card history or even income tax returns are enough to apply for a personal loan.
Although the interest rates of personal loans are a little higher, they are quick cash loans which can come in handy in times of crisis. The bank does not monitor how these loans are utilised; therefore, they can be used for any purpose such as buying a new car, renovating your home, for an international trip or even to start your own business. Here are some of the reasons why personal loans are better than other loans:
1. Easy application process: Gone are the days when people had to stand in queues for getting loans. Most banks and NBFCs offer a quick, easy and hassle-free online application process.
2. Quick Disbursement: Once your quick cash loan is approved, you can get cash within 48 hours, depending on the company policy. In certain cases, if you’re a regular customer, a loan can be disbursed within 4 hours as well.
3. No Collateral Required: As mentioned earlier, no assets such as insurance policy, fixed deposit, property or gold have to be listed as collateral. This feature reduces the amount of risk; making personal loans accessible to a wider section of India’s society.
4. Less Paperwork: All you need to apply for a personal loan is your KYC information documents and a document showcasing your income. If you can show these, there are high chances that your loan will be easily approved.
5. Versatile: Personal loans can be used for a variety of purposes such as buying your dream bike or opening your dream studio. The bank has no say in it and only speculative investments and illegal activities are ineligible.
Given these pros, it is not surprising that more and more people are opting for personal loans for their quick cash needs. Advancement in technology has made these loans faster and hassle-free. With the increase in the number of online lenders, the competition in the financial market has also increased, resulting in better services for customers. While personal loans are most suitable for short-term financial obligations, make sure that you are aware of some of its cons.
As the lender is exposing himself to a greater risk without the assurance of an asset, the interest rates tend to be higher than those of other loan options such as gold loans or home loans. Most banks also have foreclosure penalties that do not allow you to pay the entire debt before a stipulated tenure is complete. In case, a person defaults on a personal loan, it reflects on the credit history and may cause problems in the future.
Whether you are a salaried employee, a working professional or a businessman, a personal loan is a good option for getting cash instantly. But you must compare various lenders, analyse all the factors before taking the final decision and then borrow from a trusted lender. The taboo associated with debts has decreased considerably in our country and the act of borrowing money is no longer frowned upon. Instead of depending on your friends or relatives, it is better to opt for a short term personal loan so as to attain maximum benefits and to pay all the EMIs on time. But you must go through the terms and conditions carefully and choose a loan most suited to your requirement.