Personal loans are a form of unsecure loan you can obtain from banks and non-banking financial institutions. For this you’ll only be required to present your income proof as well as additional documents in order to get the personal benefits of a loan. However, personal loans are the middle of a tense zone when it comes down to these financial policies. Some individuals are in favor of personal loans while some recommend you avoid personal loans, and opt for alternative loan options.

If this seems complicated or overwhelming to those of you who are not familiar with the subject, then continue reading this blog because we’ll examine the primary benefits and disadvantages that personal loans have over other types of borrowing. We guarantee that at the end of this article, you’ll have a better understanding of what you need to consider when choosing an individual loan. So let’s talk about the issue.

Personal Benefits of a Loan

Here are a few benefits of a personal loans:

1. Faster Approval

One aspect of personal loans we love the most is that their processing times are quite quick in comparison to other kinds of loans. Most banks will approve personal loans within a couple of hours or even the same day. Thus, when you apply to get a loan for personal use there will be no hassle with getting the amount of the loan credit into your account at the bank.

2. Multipurpose

If you’re making a request for personal loans the financial institutions, including banks and non-banking companies don’t require you to provide a reason for taking the loan, as you make when applying for the home loan, a vehicle loan, or another kind of loan. This is the main reason for many people to use the personal loan instead of other loan options. It’s entirely up to you the way you plan to use the money for your personal benefit or something similar to that. Banks or other non-banking financial corporations will only be concerned with whether you’ll be in a position to repay the loan amount in full the interest amount or not.

3. There are no security requirement

As we’ve mentioned in the past that a personal loan could be a form of loan that is unsecured, which means banks and financial institutions don’t need anything more than the documents required to be able to approve the loan. If your credit score is excellent that is, banks and financial institutions don’t have a reason to refuse the personal loan request. There aren’t any security deposits conditions or other similar requirements when you apply for personal loans.

4. Simple Repayment

In the most loan options offered by non-banking financial companies, you’ll be able to choose the installment amount to repay your personal loan, with interest for a specified time frame. So you could choose the right amount of installments. Based on this, the amount of your monthly installment will be calculated, and you’ll have to pay every month. The best part is that you will not have to visit banks to settle the installment. It’ll be taken out of your account every month. These are the factors that make loan repayment significantly easier for the customers.

Personal Loan Benefits

Here are a few disadvantages of a personal loans:

1. Insane Interest Rates

If we had to create an inventory of the top rates of interest on loans, it would be the loan for personal use that will be among the top on this list. In India the interest rate for personal loans ranges from between 12% and 20 percent. In some instances the rate can be more than the average. You’ve probably noticed that many loan apps on the internet offer personal loans immediately with no paper work. They are also charging more than 22% interest on the loan total. We believe that you should avoid personal loans whenever you can. However, if you do decide to take it, make sure you get a personal loan from an RBI-controlled bank.

2. High Processing Fee

If you request personal loans, it is likely that you will not get the exact amount of the loan in your account. This is due to the processing fee fees that are taken out at the moment of the loan’s approval. For banks that are reputable processing fee charges aren’t too significant However, if you’re applying an individual loan with an unbanking financial institution, they may impose high processing fees on you.

3. Strict Eligibility Criteria

It’s a fact that not all people in India is eligible to get a personal loan. This is due to the fact that the lender (banks as well as non-banking financial institutions) checks the credit history of the applicant prior to giving the loan amount. In order to do this they will require you to provide stable salary proof and possess a high Cibil score otherwise, your loan application for personal use won’t be accepted. This could lead you that online lending apps are the best choice since they don’t require income or credit history. Right? But before you embark on this path, we’d like to inform you that the vast majority of applications available are frauds and scams on a massive scale.

4. Credit Score Impact on Late Repayments

Personal loans come with strict repayment terms, meaning that when your monthly installment is due and you have to pay it in a short period of time the payment will certainly be detrimental to the credit rating. There is nothing you can change it. This is why we don’t advise taking out personal loans.

Conclusion

You know now whether you should be applying an individual loan or not. Right? But, the truth is that every bank and non-banking financial institution has an individual interest rate and eligibility criteria, as well as terms and conditions. So if you’re sure that you need to get personal loans, ensure that you do your research prior to submitting an application.