These days, many individuals in India are taking personal loans for different expenses. Every day, banks receive many applications from interested borrowers who want to take instant personal loan as soon as possible. Unexpected financial emergencies, foreign trips, home repairs, marriage parties, and other medical expenses encourage people to take out a loan. According to the data, 77% of all working professionals in India take personal loans to meet essential financial obligations. Furthermore, the report notes that
- 48% of people take personal loans for fixed interest fees,
- 30% of individuals take online personal loans due to long repayment tenure,
- 20% of people love personal loans because of the quick release of the approved money.
Many independent financial experts argue that working individuals in India have to take care of many financial commitments in personal, professional, social, and family life. They work all day long to increase their income as much as possible. But fast increasing inflation in the country, unexpected expenses, low savings, and other factors compel them to take small personal loans from time to time.
Significant Findings of The Survey
- 87% people meet financial commitments using their earnings,
- 55% of individuals depend on family and friends for financial information,
- 25% of people use social media channels to get more information about the latest happenings in the financial world,
- 5% people contact Chartered Accountants for financial documentation,
- Most people don’t maintain savings beyond traditional savings accounts, gold, cash, and fixed deposits. Only 12% have some equity investments in mutual funds and stocks,
- 88% of Indians use Net Banking for the transaction of money. 66% of individuals are comfortable with UPI for sending and receiving money. Only 7% of people are still using cash or cheques,
- 35% of people search for methods to improve their credit score. 20% of individuals look for ways to pay off the loan quickly.
India has around 400 million working population. Despite the availability of different loan products in our country, many individuals took online personal loans in 2021. Experts believe that the demand for personal loans will increase in 2022 because of instability in the job market, skyrocketing inflation, low savings, and various other factors.
What Is Unique About Personal Loans? Why Does It Attract A Large Number of Frequent Credit Borrowers?
All Leading Banks Offer Personal Loans.
It is one of the essential factors which works in favor of credit borrowers. The Indian banking system allows public, private, and foreign banks to operate in India and offer personal loans to all eligible borrowers. They compete to reach out to needy individuals and help them get personal loans with flexible terms and conditions. This competition among financial organisations allows credit borrowers to have a look over different proposals of personal loans and use a financial package that is best for them.
There is no compulsion to deal with a particular financial organisation when looking for personal loans. If the loan package is not in your favor, you can refuse the offer made by the bank and start looking for similar offers with flexible terms and conditions available in the market. You need to study loan packages carefully and negotiate the terms and conditions of the loan with bank executives to get a loan with reasonable terms.
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It Helps You Avoid A Complete Financial Collapse.
Working professionals and self-employed individuals face financial downturns from time to time. You can easily imagine a situation in which you are totally out of cash and binding financial commitments knock at your door all of a sudden. The problem becomes quite devastating if your close relatives, family members, neighbour’s, colleagues, and well-wishers refuse to offer economic assistance due to multiple reasons.
The good thing with personal loans is that bank executives will process your application for the loan instantly and help you get the much-needed money. Depending upon your current financial condition the requirement for additional cash, creditworthiness, repayment capability, you can raise funds from Rs 50,000 to Rs 40 lakhs to meet all essential and emergency financial obligations with great comfort.
No Lengthy Documentation.
Lengthy and complicated documentation is one of the main shortcomings of traditional loans available in the market. Not only it delays the loan processing, but also results in frustration if the borrower needs money quickly. Personal loans are free from lengthy documentation processes. Still, you need to arrange the following documents to help bank executives process your application faster and announce their results soon.
If you are a job holder, submit the following document to the banker
- Personal identity and residence documents,
- Employment contract paper,
- The details of your bank account,
- Details of the latest salary credits,
- Credit score report,
- Age-related certificate, etc.
If you are a self-employed individual, you should arrange the following documents-
- Business registration paper,
- Details of your personal identity and office address,
- GST number,
- You must be running your business successfully in the profitable mode for at least five years,
- ITI details,
- Audit reports,
- No objection certificate from regulatory authorities,
- Details of the current bank account of your company.
If you are applying offline for personal loans, attach the xerox copy of all the required documents along with the application paper. In you want to apply loan online you need to upload the document on the Bank’s website in the proper format to support the data mentioned in the application form. During the background check and verification process, the bank executive will ask you to show the original copies of the documents. Simple documentation is one of the main reasons why many borrowers are turning to personal loans.
Also Read : How Online Personal Loans are Changing the Whole Financial Industry?
It’s Easy To Find A Personal Loan With A Relaxed Interest Fee.
It would help if you kept this simple thing in mind
- A loan with higher interest fees means you need more money to repay the borrowed money to the lender.
- A loan with a low-interest rate means you can pay off the debt without jeopardising your monthly budget.
Different banks offer personal loans with varying rates of interest. Moreover, the overall financial condition of borrowers, credit score, existing debt burden, loan amount have a role in determining interest fees on the borrowed money. It is difficult to say a particular figure for personal loan interest rates. But you can get a loan with a fixed interest rate starting from 6.5% to 13%. The best thing is that the interest rate applied remains almost the same throughout the payment tenure until and unless you don’t make a silly mistake. Remember that the bank or authorised money lender will impose penalties against you if you don’t abide by the loan payment terms and conditions.
Minimal Processing Fees And Prepayment Charges Are
Processing fees and prepayment charges are negligible when it comes to personal loans. When approved for the loan, the bank will deduct the processing fee from the agreed amount and hand over the rest to you digitally. In most cases, the processing fee of the loan remains 1%-3%. Personal loan prepayment charges are also quite affordable and don’t put additional pressure on individuals who want to settle the loan before its maturity date. Usually, the bank will demand 2%-2.5% as prepayment charges to close the loan before the official ending of the repayment date. Therefore, it is beneficial to contact the bank regarding processing fees and prepayment charges and take an appropriate decision accordingly.
Wow! Personal Loans Are All-Purpose Finances.
We all need money to meet multiple requirements every day. Unfortunately, our income doesn’t grow in the same ratio expenses increase with each passing day. That is why people with insufficient cash reserves take loans from time to time to maintain sufficient liquidity in their life and meet multiple financial obligations that are difficult to avoid or postpone.
It may sound unbelievable, but it’s 100% true that you can take personal loans to meet almost all monetary requirements. The bank has nothing to do with what you will do with the money once it is transferred into your bank account. You are entirely free to spend the money the way you want. But experts recommend the careful use of loan money to avoid getting trapped in an endless cycle of the debt trap and financial chaos.
You Can Use Personal Loans To Improve Your Credit Score.
Generally, personal loans are available to only those who meet the eligibility criteria and maintain an excellent credit score of at least 750 or more. But not all individuals are fortunate enough to keep their credit rating in good condition at all times. Mistakes in loan repayment, failure to repay credit card bills at the right time, and other financial blunders hurt your overall credit score.
The bank will never consider your application for personal loans if you happen to be a bad credit borrower and too many bills are pending against your name. We must admit that lousy credit scores reflect the poor financial condition of individuals. The bank and credit lenders get the impression that such a person won’t honor the loan repayment commitment. But you will be pleased to know that there is a way out to get personal loans even with bad credit scores. But it would help if you took the following actions.
- Fulfill the essential eligibility criteria put forward by the bank,
- Demand only the required amount of money as a loan.
- Submit your application to the bank in the correct format and follow the instructions given by bank executives,
- Look for a co-borrower who is ready to sponsor your candidature for personal loans. Such a person is generally called the secondary borrower of the loan and is responsible for its repayment if you fail to do so.
- Convince the bank executive that your financial condition is stable and you can repair the borrowed money as per the agreement.
If you furnish all details correctly and convince Bank executives about your deployment capabilities, the chances are high that the financial organization can approve your application for the requested money. Use received money to meet all financial obligations and make timely repayment with applicable charges. In addition, it will help you to strengthen your credit score and generate trust between you and the co-borrower.
An Ideal Way To Merge All Your Loans
In India, don’t get it astonished if you know that a person has taken loans from different banks. While this may help people arrange the required money for various expenses, they unanimously agree that dealing with various financial organizations at the same time is not an easy task at all. It may make their life a living hell, forcing them to look for a convenient way out. Taking a personal loan allows you to merge all your debts into one and deal with one organization at one time. You need to raise a formal request for debt consolidation and take all possible steps to merge different loans into one debt.
Top-Up Personal Loans Are Lifesavers.
Have you already taken a personal loan but need additional funds due to sudden financial emergencies? Don’t you have time to make a separate application for the loan and complete all formalities required for it? Then, applying for a top-up personal loan can prove a prudent decision. There is no need to make separate applications and get involved in documentation. The bank already has access to your details; it can quickly process your top-up personal loan request and give you 70 to 80% of the existing loan. It is an excellent way to get the much-needed immediate funds and meet urgent financial obligations.
Convenient Loan Application Process And Repayment Facility
Personal loans are famous for convenient application processes and repayment facilities. Banks accept applications from borrowers for instant personal loans in offline and online mode. The modus operandi of both these two loan application methods is almost the same. Individuals who don’t use the internet in everyday life choose an offline method for loan applications. Tech-savvy individuals submit their request for the loan on the Bank’s website. You must complete the form with correct details and submit it to the bank along with all documents to get a response from their executives.
They will verify your application for the correctness of the information and determine whether you deserve the requested loan money or not. It’s difficult to successfully pass all phases of background checks, verification calls, and interviews. If you get approved for the loan, the bank will send the requested money to your bank account in 3 to 4 days.
Digital repayment facility makes it easier for individuals to pay off the borrowed money at the right time without going to the bank. They need to maintain a sufficient balance in the specified bank account. The loan repayment happens automatically, and the borrower is notified via SMS and email notification. For your convenience, you must use the EMI calculator and request the banker to break your loan into small monthly, quarterly, and yearly EMIs. It makes the loan reimbursement a trouble-free task.
Taking a personal loan has become a new normal incident in India. Despite the availability of different loan products, 77% of working individuals take out instant personal loans to meet multiple financial obligations from time to time. Thanks to the outstanding features of personal loans, now it has become relatively easier to get the much-needed money in a short time without getting involved in mind-blowing formalities and wasting valuable resources. Happy borrowing!
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