Personal loan are unsecured loans given by a financial institution based on an applicant’s income, repayment capability and credit score. The application for personal loan is less time consuming and the documents required for loan are also limited compared to home loan. The funds raised through a personal loan can be utilised by the borrower for any purpose be it higher education, high-cost purchases or medical emergency. Since it is unsecured, the financial institution generally levies higher interest rates on personal loans which can be a turn-off for many people. However, if you apply for personal loan, it can be very helpful in achieving your desired goals in the long term.
- Personal loan can help you consolidated all your debts into one which become easier to manage. If you have borrowed money from various lenders, you can repay them with a personal loan and keep repaying a single loan in regular instalments.
- Personal loans can be used for any purpose. You can buy a new LED TV or take the much-desired holiday and keep paying for it in easy instalments. In case of emergencies, personal loan can help you immediately and the process is simpler and limited documents required for loan are required.
- Personal loans can be considered a better alternative to credit cards as they don’t have fixed repayment terms. Having a fixed monthly instalment as a part of personal loan can help you improve your credit score.
- Personal loans can have co-applicants from the family. This helps you show more income as a part of application process and you can take a larger amount for loan.