Availing a personal loan is easy as financial institutions endorse hassle-free processing to their clients while promising similar support and personalized service to their potential customers too. The availability of easy personal loans has encouraged an increasing number of people to make large purchases with the loan amount. Others apply for personal loans to consolidate their debts or use the money for house furnishing or remodeling.
The fact that most personal loans are unsecured makes it more attractive as borrowers are not required to provide any security in lieu of the loans taken. This means that raising cash, when required, is easy through personal loans.
Personal Loan Benefits
With interest charges ranging from 8-12 percent, personal loans taken for the right reasons and repaid within the stipulated loan tenure ensure multiple benefits. Some of these include:
- Seamless Processing: In today’s digital world, one does not have to run pillar to post to apply for a personal loan. The online presence of financial institutions involved in the lending business has now made it easy for people to borrow money through their sites or mobile apps. One may also consider visiting the nearest branch or make an application through their bank’s ATM. Most institutions do not charge any processing fees for personal loans from their customers.
- Quick Loan Disbursal: This is true of both existing customers or potential borrowers. Existing customers are at an advantage as they can easily get pre-approved loans within 10 minutes of filling the loan application. Existing customers also gain from the benefit of online approval of personal loans. Others, however, need to have a high credit score to ensure quick loan approval and subsequent disbursal within three days.
- Available for All Purposes: One of the advantages of personal loans unlike other loans is that one can use the loan amount for any end-use, be it paying for a dream wedding function, buy a hi-end gadget, invest in a business enterprise, pay for medical expenses or use the money to make a down payment for a house before buying or home remodeling, etc. The best way to meet an urgent need for cash is to apply for a personal loan.
- Zero Security: Their unsecured nature means that intended customers do not have to offer any security or collateral like home, fixed deposits or shares for the loans taken.
- Hassle–free Documentation: As opposed to most other loans where you must be armed with a slew of documents to prove your eligibility for the loan, personal loans do not involve too much paperwork. All you need to do is to decide the loan amount and to submit documents showing proof of identity and address along with income proof. Existing customers have access to pre-approved loans, thus, relieving them from the need to provide documents.
- Choice of Loan Tenure: Depending on your current financial conditions or future financial prospects, you may choose the loan tenure needed to make the loan repayment. For a bigger loan taken, one may choose the loan repayment period for as long as seven years. However, prolonged loan tenure means an increased number of EMI payments over the period. This explains why people choose to repay their loans quickly or prepay their loans before the stipulated period.
- Flexibility of Interest Rates: You may choose to repay your personal loan interest rate or opt for a reducing balance method. Depending on the need and ability to repay the loans, one may choose the interest payment mode accordingly.
- Tax Benefits: Most people look for tax benefits for every investment they make. Then why not enjoy tax benefits on loans taken too? One can claim a deduction to the tune of Rs. 1, 50, 000 on personal loans taken for home remodeling. While the interest payable for loans taken for business enhancement is eligible for tax deduction, personal loans taken for purchase or construction of a residential property can be claimed for tax deductions under Section 24 of the Income Tax Act 1961.