A personal loan has got multiple benefits for the ordinary person. The personal loans can be obtained for a tenure of a maximum of 5 years. And the interest rates being charged to an individual differs from lender to lender. Banks typically charge interest rates starting from 9-24% per annum to the borrowers. Banks also charge penalties to the borrowers in case of delay or default of the loans to the borrower. Also, the credit score gets reduced in case of delay or default of loans. Thus it is necessary to repay the installments on time. Thus personal loans are available in the pre-approved category as well. The borrower can avail of the loans by just a click away through net banking, and the amount may get credited to the borrower’s bank account. In the online application of personal loans, the borrower can get instant loans within few hours after the loan is applied. Thus, personal loans may be necessary for the borrowers in case of a medical emergency, and instant loans can be applied. The borrower can avail of loans from any of the banks for personal use as per the borrower’s choice.
Personal loans can be helpful in many ways to the borrower. Thus people mainly from the lower-income group or else middle-income group avail personal loans from the lenders. Therefore, the people with less or moderate income are among the banks’ significant target segment for disbursement of personal loans. The banks charge slightly higher interest rates on personal loans as compared to home loans. And also the personal loans are not exempted under any of the income tax acts for the tax exemption. Banks also charge one-time processing fees to the borrower while processing the loans. The banks check an individual’s credit score, which is expected to be good or excellent for the disbursement of the loans. The personal loans require minimal documentation and thus can be approved quickly by the borrower. Bank requires income proof, government identity proof & employment proof for the approval of loans. The minimum salary required for the support of personal loans is Rs.25,000 per month. Some banks may have different salary criteria of more or less pay against which the loan can be approved. The banks may charge higher interest rates to borrowers with a lower CIBIL score.
Following are the situations wherein personal loans can be required:
- Renovation of the house:
ETC. The home renovation is a significant purpose for which the loans may be required to be taken. The home renovation includes waterproofing, painting, and furnishing, change of bathroom fittings or tiles, making of false ceiling. The renovation of a house may sometimes cost multiple lacks, and thus that personal loans may be required to be taken by the borrower, who can be paid in installments to the borrower.
- Medical purpose:
Personal loans can be availed as the medi-claim policy may also have some limitations. The loans may be required for medical purposes as well. And the cost of medical operations or surgeries may be very costly, which for the borrower may be impossible to pay on a full down payment basis; thus, in that case, availing of personal loans may be helpful.
- Wedding purpose:
Indian weddings are known for lots of expenditure and glamour. Thus, the expenses required may be very high for the wedding purpose as the function may be grand. In such cases, the customer can avail of loans of up to Rs.25 lakh for the wedding purpose.
- EMI for business purposes:
ETC. Though business loans can be separately being applied, part of the personal loans can be availed for business purposes. The business may require a lot of expenses on a regular basis like payment of salaries of the employees, purchase of new office/warehouse, amount of rent, electricity expenses, stocking inventories. The bank does not ask for any proof of expenditure; only payment of installments on time is necessary.
Thus we can conclude that personal loans are beneficial for many purposes. Instead of ending up the savings, the borrower can avail of personal loans from the bank and pay the installments from the running income through a job or business.