Personal loans cater to various individual needs. You can pay them off in installments without any stress. A personal loan acts as your best ally when a financial crisis hits you. You could take a personal loan to deal with situations such as home renovation, medical emergency, education, travel, marriage, and so on. The interest rate offered depends on your credit history. Also, you receive flexible tenure options.
Apply personal loan easily either offline or online, provided you meet the eligibility criteria and have appropriate documents in place. Following are the reasons why personal loans are the ideal choice:
- Eligibility criteria: The conditions differ from lender to lender. The basic ones, however, are –
- Should be 18 years and above
- Must be an Indian resident
- Need to receive regular income
- Must hold a decent credit score
You could also use a personal loan eligibility calculator before making a final decision.
- Documents: The documentation procedure varies from lender to lender. The standard papers you need are –
- ID proofs such as passport, Voter’s ID, driving license, PAN
- Address proofs like ration card, driving license, passport, utility bills, LIC policy, resident certificate
- Duly filled guarantor form
- Income proofs such as form 16, ITR of last three years, past three months payslips, profit and loss statement, balance sheet attested by a Chartered Accountant, past three years bank statement
- Benefits: Availing a personal loan offers several benefits to the borrower –
- Consolidate debts: If you have a considerable obligation owing to multiple credit card dues and other investments, you can apply personal loan to consolidate other minor debts. The combined interest rate is comparatively lower than the rate of interest on different loans. You can also easily manage a single installment.
- Flexible tenure: If you want to do away with the additional burden and wish to maintain low monthly installments, you can opt for a personal loan. Three years of personal loan will have approximately 36 payments while a five-year plan will have 60 payments. The principal amount gets divided among the installments. So, you will be paying as per your ability.
- Large amount: It is always better to borrow a large amount to deal with the expenses than taking separate loans for different needs. You can fulfill medical emergency, home renovation, wedding, and other such costs all at once.
- Fixed and floating rates: Personal loans come with two types of interest rates – fixed and variable. You can opt for any as per your payment convenience. Each has its benefits. You could select for a fixed price at the beginning and change it to floating later.
- Improves credit score: A personal loan is structured well. You can choose the desired term for repayment, leading to regular EMIs, which improves your credit score and history.
- Pre-closure and foreclosure: You can repay personal loan EMIs through Electronic Cancellation System (ECS), cheque, and auto-debit. This way you can repay the credit quickly. Also, you have the option to prepay and save a lot on the interest amount. Some lenders have pre-closure charges in place. Hence, inquire about the same.