A personal loan is a credit granted to an individual for satisfying their own needs, which require higher expenses. For example, the Travel needs domestic tours and international tours or else to pay medical costs, renovate the property, buy electronic goods.ETC. The loans are charged interest rates of 11-24% per annum to the borrower by the lender. And no tax benefit is being provided to the borrower against the repayment of the principal and interest amount. Banks allow the borrower to utilize the funds freely without consent. There is no special provision to be shown to the bank regarding the expenses. Only the installments should be paid on time, failing which the banks may charge a heavy penalty to the borrower. Thus the banks quickly credit the loans to the borrower within 48 hours, or else sometimes even instant loans are also provided to the borrowers against the online application.
Personal loans have helped multiple people satisfy their own needs and buy goods of their choice even at low salaries or non-availability of funds. Some leading electronic retailers have tie-ups with the key lending financial institutions to provide loans at 0% interest rates. Only the processing fees are being charged to the borrower. Personal loans are maximum utilized for the purchase of white goods in the markets. The medical bills can be paid through personal loans. The medi-claim policy has specific limitations beyond which the individual may not be able to pay the medical bills; in that case, personal loans can be obtained. Some medical treatments are very costly; thus, obtaining loans may become essential for the borrower to pay medical bills. There is a special quick approval process for the medical loans to get approved early as the funds are required urgently.
Features of the Personal Loans
- Quick disbursal and approval of the loans are possible. In the case of the online process, loans can be availed on an instant basis as well
- Loans can be availed for a maximum tenure of 5 years
- The maximum amount which can be obtained is Rs.25 lakh for the loans
- The installments start on an immediate basis; thus, the borrower should repay the installments timely
- The loans are also charged with a processing fee of 0.50% to 2.50% as a one-time fee
- Bank does not restrict the utilization of funds. The loans funding can be utilized for any purpose according to the choice of the borrower. The borrower can make single-use or else multiple uses for the loans being obtained
- Personal loans are not exempted under any section of the act for the tax benefits
- The CIBIL score should be at least 700 points for the approval of loans
- A customer with a higher credit score is being given preference
- The minimum salary of the applicant should be Rs.25 thousand per month to avail of the loans
Benefits of Personal Loans
- Personal loans help borrowers utilize the funds freely for any purpose, as such is not the case in home loans or car loans.
- The loans can help people satisfy their own personal needs by getting the liquid cash in hand.
- The loans help provide a boost to the markets as people can purchase bikes, white goods, or book tour packages with the help of personal loans. As many people get money to spend in the markets, it is beneficial to the businesses to flourish based on obtaining personal loans.
- The interest rates charged are lower as it starts from 11% per annum to the borrower.
- The loans can be approved on an instant basis within few minutes in case of online application. Thus the process is quick and faster.
Personal loans are of great benefit to the borrower and also for the markets to flourish. The banks can provide loans to borrowers at relatively lower interest rates. Personal loans are also necessary for emergency expenses like urgent repairs of the house or medical expenses. In case of significant costs required, the borrower does not need to replenish the funds; thus, the borrower can pay the amount wherever needed with