As of July 2024, personal loans in India grew by 14.4%, reaching nearly INR 55.3 lakh crore, according to RBI’s sectoral data. This notable growth highlights the increasing popularity of personal loans for various reasons – be it debt consolidation, emergency medical expenses, higher education costs, home renovation or other significant purchases.
But why are personal loans so popular? What benefits make them such a favoured choice for borrowers?
In this article, we’ll explore the top benefits of instant* personal loans and how they can be the right financial solution for you.
1. Quick Access to Funds for Emergencies
Online personal loans are typically approved and disbursed swiftly, depending on the applicant’s eligibility and the lender’s policies. You can apply for personal loans with minimal documentation, which can be uploaded online, saving valuable time and effort. Additionally, these loans do not require any collateral, which further speeds up the processing. These features are invaluable in urgent situations, such as medical emergencies, where quick access to funds is crucial.
2. Helps with Debt Consolidation
Managing multiple debts can be stressful, especially when interest rates and repayment terms vary. A personal loan can simplify this process by consolidating your existing debts into one manageable monthly payment, often at a lower interest rate.
For example, credit cards in India typically carry high interest rates. By taking out a personal loan to pay off multiple credit card balances, you can not only streamline your repayments but also save on interest costs, as personal loans generally offer lower rates than credit cards.
This strategy allows borrowers to take control of their finances and reduce the burden of multiple high-interest payments. However, it’s always good to check with lenders for specific details, as loan terms and interest rates can vary.
3. No Restriction on Usage
Unlike purpose-specific loans, such as auto loans, personal loans offer borrowers the flexibility to use the funds however they choose. Whether it’s for medical expenses, travel, weddings, education, home renovations, or other personal needs, there are nearly no restrictions on how the loan can be spent. This freedom makes personal loans a versatile option for a variety of financial goals.
4. Improves Financial Planning with Fixed Repayments
Personal loans typically come with fixed interest rates and Equated Monthly Instalments (EMIs), making it easier for borrowers to plan their finances. Knowing the exact EMI amount in advance allows for better budget management, ensuring that monthly payments fit alongside other financial obligations and goals. This predictability helps borrowers maintain financial discipline and avoid unexpected payment fluctuations.
Additionally, reputable lenders like SMFG India Credit offer user-friendly personal loan EMI calculator, allowing borrowers to estimate their monthly payments before applying for personal loans online.
5. Potential for Credit Score Improvement
A personal loan can positively impact your credit score, provided you manage repayments responsibly. Making timely payments demonstrates financial discipline, leaving a positive impression on lenders and building a solid credit history. This can also open the door to future borrowing opportunities. However, it’s important to remember that missed payments or taking on more debt than you can handle can negatively affect your credit score.
6. Facilitates Investment in Self-Growth
Personal loans can serve as a valuable tool for funding self-improvement goals, such as pursuing higher education, attending skill development programs, or even starting a small business. Since personal loans are unsecured, there’s no need to pledge assets, which reduces risk for borrowers.
For parents, a personal loan can be an option to finance their child’s education, including international certification programs that enhance employability and income potential. This allows families to invest in their future without the burden of asset-based collateral.
7. Transparency in Loan Terms
Reputable lending institutions like SMFG India Credit prioritise transparency in their loan terms, making it easy for borrowers to understand. They clearly mention all fees and charges, such as processing fees and loan cancellation charges, ensuring there are no hidden costs. A clear and upfront breakdown of costs helps borrowers avoid any surprises during the repayment period.
8. Accessible to Diverse Borrower Profiles
Personal loans, being unsecured, are accessible to a wider variety of borrowers who may not have significant assets to pledge. Instead of relying on collateral, lenders assess other important factors such as creditworthiness, income, and repayment capacity. This makes personal loans a viable option for borrowers looking to meet their financial needs without having to pledge assets.
Conclusion
Personal loans offer significant flexibility, accessibility, and a wide range of uses, from addressing emergencies to funding education aspirations and simplifying debt management. With their ability to cater to various financial needs, these loans present valuable benefits for borrowers. However, before applying, it’s crucial to assess your financial situation, compare offerings from different lenders, and ensure you can comfortably manage the EMIs. Responsible borrowing and making timely repayments are essential to maintaining financial health and a strong credit history.
*T&C apply. Please note that final approval, loan terms, and disbursement process may vary based on lender policies and borrower’s eligibility.
Disclaimer:
CBD:
Qrius does not provide medical advice.
The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) outlaws the recreational use of cannabis products in India. CBD oil, manufactured under a license issued by the Drugs and Cosmetics Act, 1940, can be legally used in India for medicinal purposes only with a prescription, subject to specific conditions. Kindly refer to the legalities here.
The information on this website is for informational purposes only and is not a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or another qualified health provider with any questions regarding a medical condition or treatment. Never disregard professional medical advice or delay seeking it because of something you have read on this website.
Gambling:
As per the Public Gambling Act of 1867, all Indian states, except Goa, Daman, and Sikkim, prohibit gambling. Land-based casinos are legalized in Goa and Daman under the Goa, Daman and Diu Public Gambling Act 1976. In Sikkim, land-based casinos, online gambling, and e-gaming (games of chance) are legalized under the Sikkim Online Gaming (Regulation) Rules 2009. Only some Indian states have legalized online/regular lotteries, subject to state laws. Refer to the legalities here. Horse racing and betting on horse racing, including online betting, is permitted only in licensed premises in select states. Refer to the 1996 Supreme Court judgment for more information.
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