A personal loan is always a great option when the borrower needs extra cash. The Borrower can, however, use it to finance the home improvement project, a child’s education, or a wedding. He can also use it to pay for an overseas trip or for an unforeseen medical bill as well. 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. So, the process of getting a personal loan is thus considered to be hassle-free. The personal loans is 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: 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 Rs 1lakh and Rs 15lakh. Besides, the lender also sends the money to borrower’s account. In fact, he could even use a personal loan when he is traveling abroad.
- Flexible prepayment options: If a borrower gets a bonus or an increment, then he might want to use this extra money in order to repay the personal loans. But there are however some conditions here. The borrower may thus 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 prepays within a year, then he can pay at most 25% of the principal amount.
- Flexible modes of payment: Making of 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 in order to meet unavoidable expenses or as an investment in future.