When you go to a lender for a loan, you will be surprised by the number of options available. Generally, there are so many options that an uninitiated customer would be quite taken aback.
However, it doesn’t matter who you go to be it a loan app or a brick-and-mortar lender, there’s one kind of loan that will always be offered; a personal loan. These loans are prevalent and in fact, come with a lot of perks and advantages.
What are Personal Loans?
A personal loan is a form of funding where the borrower goes to a bank and gets a lump sum of money at a fixed rate. These loans can be availed for a wide range of reasons. You might have a big event such as a wedding coming up in the family, or might want to give something expensive to a loved one. In case you wanted to buy a new machine or decided to make a trip abroad, a personal is the best option to get the financing for these goals.
Personal loans are a relatively cheaper form of Debt when compared to credit cards or student loans. Generally, a personal loan’s interest rate depends on the repo rate set by the Reserve Bank of India (RBI).
What are the Unique Features of Personal Loans?
A. They are easy to avail:
Personal loans are one of the most accessible forms of funding available to the average citizen. You can get them on any of the personal loan apps available on the App Store and the Google Play Store. Most lenders require you to have a respectable credit score and possess some of the standard documents; that’s it. Personal loan apps take that one step further and disburse the loan amount within 24 hours of being approved!
B. Personal loans can be availed for large amounts:
A personal loan can be taken for a maximum amount of around Rs 20 lakhs. The actual threshold for a personal loan may vary from lender to lender. Despite some variances being depending on whom you approach for a loan, there’s no denying that personal loans can unlock large amounts of money for your needs. These kinds of loans are the easiest to avail on instant loan apps.
C. Personal loans have flexible repayment periods:
Depending on your needs, you can set the repayment period for your personal loans as well. This is one feature that distinguishes personal loans from other forms of Debt, such as credit cards.
Apart from giving customers a flexible repayment tenure, personal loans are also one of the cheapest forms of Debt. If a credit card offers customers an Annual Percentage Rate of 43 per cent, then a personal loan is less than a 7th, at 6 per cent per annum.
D. These loans are an unsecured form of Debt:
Most personal loans are unsecured. What does this mean? It means that the customer does not need to pledge any collateral to the lender. Most online loan apps offer customers a choice between secured and unsecured personal loans. Typically you don’t need to opt for a secured personal loan unless you want to take a genuinely massive sum of money or if you want to get a lower interest rate.
Personal loans are one of the most liked kinds because of the perks mentioned above. Before taking on any form of Debt; however, it is essential to understand the terms and conditions of your loan. Comparing your options and then choosing the best lender will make sure that you get the best deal.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.