• A personal loan is always a great option when the borrower needs extra cash and there are various benefits of personal loans.
  • The Borrower may use it for various purposes
    • Finance the home improvement project
    • A child’s education
    • Wedding
    • For an overseas trip
    • A medical bill, etc.

Advantages of Personal Loan

  • One of the biggest advantages is that the borrower can get a personal loan quickly.
  • Another advantage is that he needs to provide fewer documents.
  • The process of getting a personal loan is thus considered to be hassle-free.
  • Personal loans are also a good fallback option if the borrower needs cash urgently when his bank balance is low. But before he applies  for a personal loan, then here are a few points to consider:

Quick availability

  • The borrower can get approval for a personal loan in as little as 24 hours. He simply needs to have all his information in place.
  • Lenders thus offer anywhere between INR 1 lakh and INR 15 lakh. Besides, the lender also sends the money to the borrower’s account. In fact, he could even use a personal loan when he is traveling abroad.

Flexible repayment options

  • If a borrower gets a bonus or an increment, then he might want to use this extra money to repay the personal loans.
  • However, the borrower may need to pay a penalty in the case of part payment within less than six months of the loan disbursal.
  • Prepayments also become free of charge after this period. If he makes repayment of the personal loan within a year, then he can pay at most 25% of the principal amount.

Flexible modes of payment

Making the payments on the loan is easy enough. He can either pay online or through an auto-debit instruction. The borrower can even issue post-dated cheques.

Processing fee

Upon applying for a personal loan, the lender would charge the borrower a non-refundable processing fee. The amount would thus vary depending on the particulars of the

Unsecured loan

  • Unlike a home loan or a car loan, a personal loan is generally considered as unsecured. In other words, he does not need to provide any kind of collateral.
  • As they are unsecured loans, the rate of interest thus tends to be a bit high.
  • The personal loans can thus be a good back-up when the borrower faces a cash crunch. But he should not use it indiscriminately.
  • He must get a personal loan only to meet unavoidable expenses or as an investment in the future.