In the journey of life, we all face unexpected financial needs. Whether it’s for a medical emergency, a house or car repair, a dream vacation, there are times when we may need extra money. This is where Personal Loans come to our rescue. In simple terms, Personal Loans are like financial friends that help us when we are in a financial crunch. In this article, we will explore briefly about Personal Loans and their importance in people’s everyday lives.
What Are Personal Loans?
When we need some money for something important, like urgent medical expenses or home improvements and if we don’t have enough savings, personal loans can be our solution. A Personal Loan is a type of borrowing where we can get a sum of money from a Bank, NBFC or even an online lender that can be repaid over a period of time with interest. Usually, Personal Loans sanctioned are in smaller amounts usually from Rs.10,000 to around 10 lakhs for a fixed tenure ranging from around 1 to 7 years period.
Importance of Personal Loans
1. Emergency Expenses: Life can be full of surprises, and not all of them may be good. Personal loans are invaluable when unexpected expenses like medical bills, education, or urgent personal need arise. They can keep us afloat during such tough times.
2. Debt Consolidation: Many people have multiple debts, like credit card balances, car loans, and student loans. Through Personal loans we can repay these different debts and convert into one manageable monthly loan payment, often with a lower interest rate. This can simplify our finances and can save our money in our difficult times.
3. Home Improvements: We all want to maintain our homes in a better way, but renovations and repairs can be expensive. Personal loans can make it possible in renovating our home, making it more comfortable and thus increasing its value.
4. Education: Education is everyone’s right and key to a brighter future, but at the same time it can also be expensive. By acquiring Personal loans we can cover the urgent expenses of college or professional courses and training, giving us or our children the opportunity to learn and grow in life.
5. Big Purchases: Sometimes in life, one may need to make an important purchase, like a new car or a once-in-a-lifetime vacation. Personal loans can make these dreams a reality.
Personal loans have a simple process as follows:
1. Application: Application for a personal loan through a Bank, NBFC, or an online lender. They will ask for information and documents for current income, employment, and credit history i.e. CIBIL score, Address and Identity proof etc.
2. Approval: The lender then reviews the application and verifies all documents including the credit score. The lender may require a minimum credit score to approve. If approved, they will specify the loan amount and interest rate.
3. Receiving the Funds: Once it is approved, the amount of loan sanctioned is credited to the borrower’s bank account in lump sum.
4. Repayment: The loan can be repaid in Equated Monthly Instalments(EMI) over the tenure of loan, which can range from one to seven years. Each monthly instalment includes both the principal amount borrowed and the interest for the period.
5. Interest Rates: Personal loans have higher interest rates than other loans, which determine the extra amount to be paid for the borrowing. Interest rates can vary, so it’s important to compare and find the best deal from the market.
Advantages of taking a Personal Loan:
1. Flexible Use: Personal loans can be used for almost any purpose, from debt repayments to home repairs, from education expenses to vacation expenses, for medical emergencies and shopping expenses etc.
2. Quick Access: The application process is generally faster and simpler compared to other types of loans.
3. Fixed Payments: Monthly payments remain the same, making budgeting easier.
4. Lower Interest: Personal loans often have lower interest rates compared to credit cards.
Disadvantages of taking a Personal Loan
1. Interest Costs: While personal loans have lower interest rates than credit cards, they still are higher than other loans which can increase the total cost of the loan.
2. Credit Check: Lenders usually check the credit history of their customers, and a poor credit score may result in higher interest rates or even rejection.
3. Debt Risk: Borrowing money should be done with caution. Taking on ourselves too much debt can lead to big financial strain if we can’t make our monthly payments on time.
4. Fees: Some lenders may charge application fees or prepayment penalties that can increase the total cost of borrowing. Therefore, it is important to read the terms and conditions before applying for a Personal Loan.
Tips for Getting a Personal Loan
1. Checking CIBIL/Credit Score: Credit score affects the interest rate that may be charged by the lender. A good credit score can save our money on interest.
2. Comparison of offers: Different lenders may be offering different interest rates and terms. It is better to survey the market to find the best deal suitable.
3. Borrowing decision: One should only borrow what one truly need and can comfortably repay.
4. Know all the details: We have to make sure that we understand all the terms and conditions and details of any fees involved in the deal before deciding to apply for the loan.
5. Creating a budget: Before taking out a personal loan, we need to ensure that the future EMI of the loan fits into our monthly expense budget easily. Unnecessary burden of additional expenses is to be avoided if there is already an existing loan to be repaid.
Personal loans are a financial tool that helps people to overcome their life’s daily financial challenges. Whether it’s for emergencies, big dreams, or making our life better, personal loans can be a lifeline.
However, it’s essential to use them wisely, borrow responsibly, and understand the terms and conditions of the loan. When used wisely, Personal loans can be our friend in managing our finances and achieving our goals in times of need.
SHREYASS FINANCE, associated with multiple Indian and Foreign Banks offers Personal Loan services with minimum documentation and quick disbursement. Call us on 9967803324 or mail to shreycons@gmail.com.