A personal loan can be important for many in need. Hence, understanding its usage and benefits is essential. This article will highlight the several benefits of personal loans from both banks and online aggregators so you can select the one that best suits you, and will also assist you to understand how to get personal loan.
What is a Personal loan?
A personal loan, in simple words, is the money you borrow from a bank or a financial institution (it can also be from a private lender, a credit company, or a non-banking financial company), when in need. . Personal loans are well-known for being the easiest and quickest loans to obtain. It also has many advantages including restricted tax benefits, making it the most popular kind of loan. As a result, there are a wide variety of personal loans that a borrower can choose from, such as weddings, emergencies, education etc.
If you are looking to avail of a personal loan, you can opt for Buddy Loan. Buddy loan is a loan aggregator whose lenders offer many features for a personal loan. You can enjoy low-interest rates, higher CIBIL scores, as well as flexible repayment options. Personal loan with the interest rate starting at 11.99%!
Personal Loan And Its Types
Personal loans in India generally fall into the following common categories:
• Wedding loan
Considering the high cost involved in weddings, banks and other financial institutions offer wedding loans. When you have a solid financial foundation, you can easily plan for the catering, shop for jewellery, handle the guest accommodations, and reserve a venue for the auspicious occasion. This type of personal loan is what you need to prepare for your special day.
You can opt for a wedding loan from Buddy Loan, as it offers the following features:
(A) You can get any loan amount ranging from INR 1000 to INR 15,00,000.
(B) It has a flexible repayment tenure of 6 months to 5 years.
(C) Paperless and minimal documentation is required.
Loan for Home Renovations
Renovations and setting up a home can be expensive and since there is no end purpose for what to use a personal loan for. It is offered to applicants to assist them in decorating, purchasing furnishings, or repairing their residences.
Loan for Travel
If you love experiencing new culture and food then with the support of a personal loan, it is now possible to travel anywhere around the world, at any time you want. Travel insurance is also frequently included as an added benefit with travel loans. As a result, you are protected from unplanned financial emergencies.
Loan for Education
One major benefit of a personal loan is that you can take it to fund your own education or your child’s education. Several banks, financial institutions and loan aggregators offer educational loans to help you pay for tuition or schooling abroad.
Retired workers are the target audience for this, and the eligibility requirements are often flexible. Some lenders go so far as to offer loan amounts that are ten times higher than the pension the borrower received the previous month. At the same time the EMI will be 50% of their take home income or pension.
Also Read: Medical Loan: Credit Score Vs Foreclosure!
These different types of personal loans have many features that you can choose or customise as per your convenience. Understanding the different features will greatly help you when availing of a loan.
Salient Features of Personal Loans
Flexibility in choice is another benefit of personal loan. Loan details like security, tenure and kind of interest rate are important while taking up a loan, as a borrower can choose them accordingly. Common personal loans require no collateral. Thus, the interest rates are higher. However, there are secured personal loans as well. Some of the features to consider are:
Most personal loans are unsecured loans which means that there is no collateral that is required to be submitted. However, the interest rate for such loans will be higher as compared to secured loans. The interest rate may be based on the applicant’s credit score and financial history. The best part about these loans is that they are disbursed faster, generally, in a week.
Secured personal loans are loans where collateral security is required. Banks offer secured personal loans through which the borrower can borrow money against their car, home or property. The interest rate for this type of loan is usually lower than an unsecured loan. It is also possible to get a higher loan amount with a secured loan as it is considered as less risky by the lender.
There are two types of interest rate that you can choose from with personal loans. A fixed interest rate is one where the EMI does not change. The advantage of this type of interest rate is that if the market rates of loans become higher, there will be no effect on the fixed-rate, it will remain the same.
Another type of interest rate is a variable rate where the EMIs of the personal loans vary. The only advantage of this type of interest rate is that if the market rate of loans becomes lower, the rates of variable-rate personal loans will also become lower.
Debt Combining Personal Loans
When a borrower has a number of loans to repay he can opt for debt consolidation. The borrower can combine their debts into one personal loan by consolidating them with other loans like home loans, and car loans.
A personal loan provides flexible EMI
Another benefit of personal loan is the EMI. EMI, also known as Equated Monthly Instalments, comprises two components: the principal amount and interest. Usually, the repayment terms and EMI of personal loans are flexible and affordable for most people. The borrower makes the payment monthly to the lender in a stipulated amount of time. The borrower can choose an EMI plan that fits their repayment capabilities. Before choosing an EMI plan, you can calculate how much you are capable of repaying in a month. There are also many ways by which an EMI can be calculated. With the age of digitalisation, many banks and NBFCs offer an option to calculate your EMI on their websites, making it easier and more efficient for borrowers.
Benefits of a Personal Loan
A personal loan is great for numerous reasons, mainly when you are in need of emergency money because of its versatile nature. Some of the many benefits of a personal loan are:
No defined end usage:
A personal loan has no restrictions on how you utilise the loan. Its versatility makes it perfect to avail when you are in sudden need of finances no matter the reason. You can take a personal loan for medical purposes, to revamp a home, to fund your dream wedding, education or even travel. You can even use a personal loan to pay off existing debt.
Quick disbursal time:
Instant personal loan disbursal is possible when you meet all the eligibility criteria necessary. Once the documents are processed and approved, the loan can be disbursed in 72 hours or less. Some banks and NBFCs also offer quick disbursals of loans to existing customers when they apply for the loans online or through their websites.
Another benefit of personal loans is that they are unsecured loans which means that a lender will not ask for collateral when you take a loan. Although a secured personal loan is available, most people opt for unsecured personal loans.
Flexible repayment tenure:
Most banks, NBFCs or loan aggregators will offer flexible repayment periods for personal loans. At Buddy loan, the tenure for personal loans is from 12 months to 5 years.
Improves your credit score:
A good way to improve or grow your credit score is through a healthy habit of borrowing and repaying back the loan. Timely repayments of a loan will help you grow your credit score. However, it should be noted that taking too many loans from different lenders may have a negative impact on your credit score. So, take a personal loan only when absolutely necessary. At the same time, defaulting on a loan will negatively impact your credit score. So, get a loan with an affordable interest rate to be able to make timely repayments.
A personal loan can have tax benefits when taken for specific purposes. Taking a personal loan for home renovation, purchase of assets or expanding a business can have tax benefits according to the Income Tax Act of 1961.
While traditional banks offer an array of benefits for taking a personal loan, online loan aggregators also offer many benefits for it. Below are some of the crucial benefits of personal loan through online aggregators.
Crucial Benefits of Taking A Personal Loan Through An Online Aggregator:
Valid And Vivid Schemes
Loan aggregators are known for allowing you to compare the loan offers of various banks and suggest the ones best suited to your profile and requirements. New applicants can choose the best personal loan deal with the help of customer reviews and feedback from previously successful personal loan borrowers.
To make client service beneficial and less time-consuming, loan aggregators use particular and straightforward tools like EMI calculators and eligibility calculators integrated online alone. Calculate the monthly payment you must make on the borrowed money based on the interest rates and loan terms you have selected using these tools. They are free of cost and allow you to define your loan requirement more precisely, thus reducing your chances of rejection.
Instant E-Approval And Quick Disbursal
Most aggregators run special schemes from their banks, including pre-approved loans or instant e-loans for borrowers who meet the eligibility criteria for such schemes. Even without this integration, these aggregators can handle and coordinate your loan application with the banks in real time because they are integrated with their partner banks.
Unique Customer Service
These online aggregators operate a customer desk service where a dedicated loan advisor assists you in understanding the entire personal loan application process and answers all your questions about eligibility, offers, procedures, documents, and repayment alternatives. They even work with the banks to organise and follow up on your behalf. This distinguishes them from other companies because their offers combine digital and personalised services for their clients.
All personal loan applications submitted with online aggregators are sent electronically to the concerned bank department, assuring complete privacy and transparency. So, with the help of online aggregators, your personal loan search becomes very easy, transparent and hassle-free. The best part is that even with personalised and quick services, these loan providers do not charge their customers fees and offer attractive cashback schemes.
People get a loan only when they are in dire situations, so getting an application rejected can cause more stress than necessary. So, how to get a personal loan application accepted successfully? Below are some tips that you can follow to ensure your application gets accepted.
In addition to receiving a personal loan at the appropriate time, you may profit more through loan offers from Buddy Loan. To find out more about the offers and features it provides!
Tips For A Successful Personal Loan Application:
If you apply for a personal loan, you can use it for various purposes, such as paying off wedding expenses, medical expenses, renovating your house, supporting your child’s education, or even paying back an existing loan. Depending on many factors, a loan is typically taken when temporary and urgent cash is required.
Due to the situation’s urgency, it can be extremely frustrating and upsetting when the loan application gets rejected. Therefore making the right decision when applying for a loan is necessary. Lenders look into certain factors before approving any loan application. Knowing these factors would help you ensure that your loan application gets approved. Below are some points to consider to ensure your loan application gets approved:
Improve Your Credit Score
A lender would first examine your credit rating when you apply for a personal loan. Credit rating is the most unambiguous indication of your financial behaviour and history. By checking your credit rating, lenders determine whether you can repay the loan. So, before you apply for a loan, it is essential to check your credit score first. A credit score of 750 and more will be considered as an excellent credit score. If you have a low credit score, take the necessary steps to raise the score before applying for a personal loan.
Manage Your Finances
Effectively managing your money means using both your monthly income and any available credit. How you use your finances will significantly influence your loan application’s chance of being approved.
Keep your credit cards from being “maxed out.” Customise your credit limit to fit your monthly expenses so as to avoid any negative impact on your credit score. Always check the available balance on your credit cards, your payment history with all kinds of credits, and your previous financial history.
Never default on payments. Make sure to continue making payments on any existing debts. Use them for 20% to 25% of the credit limit instead. Additionally, ensure you pay the whole amount due each month, not just the bare minimum.
Efficiently managing your finances shows the lenders that you are a good borrower and are in complete control of all your finances.
Only Borrow What You Need
Lenders have a higher risk when giving a loan of a significant amount to the borrower as compared to giving a small amount. Also, borrowing more than necessary will only burden you with the repayment. So, only apply for the required loan amount, as it will improve your chances of getting your application approved.
A borrower needs to ensure that they are eligible and all the documents are in order before applying for a personal loan. This will help them get a successful loan application.
Points To Ponder on Personal Loan
The financial market’s highest interest rates are frequently seen on personal loans. With an interest rate as low as 11.99% p.a., personal loans rank among lenders’ largest sources of interest-based funding. However, loan aggregators help you with the best repayment options for five years. Explore Buddy Loan to reap more benefits of personal loans. If you have any questions or queries, don’t hesitate to get in touch with us at email@example.com.
Frequently Asked Questions
Q. How much loan amount can I get based on my earnings?
A. The amount of personal loan you can get will depend on how much you earn. This is because lenders will only give an amount that you will be able to repay back. Usually, lenders will give an amount that is 30 times more than an individual’s monthly income, with their EMIs tailored to minimise the risk of them defaulting on the loan.
Q. Can I get a loan with a low credit score?
A. While lenders would prefer borrowers with a credit score of 750 or more, it is possible to get a loan even with a low credit score. However, the interest rate might be a little higher.
Q. What are the factors that can affect an EMI?
A. The loan amount, tenure and interest rate are three major factors that affect an EMI.
- Loan amount: the bigger the loan amount, the bigger the EMI
- Tenure: A longer tenure will make the EMI smaller, and a shorter tenure will mean a larger EMI amount. However, a longer tenure will mean that you will have to pay a higher interest.
- Interest rate: An EMI is directly proportional to the interest rate, and the interest rate of a loan will depend on the credit score of an individual, loan amount, repayment capacity, and more.