Advantages and Disadvantages of the Personal Loan in India

Advantages and Disadvantages of the Personal Loan in India

Personal loan is an unsecured loan that can come in handy when you need money urgently. Personal loans are a boon to people, who need funds immediately. Typically, most people can gather funds over time. But, these loans help people step out of troublesome situations, if chosen and used well. However, you need to understand these loans to use them well. It takes more information than what you normally get by use a personal loan EMI calculator. Here is the holistic introduction to personal loans.

* Speedy loan approval: Banks and finance companies want to disburse these loans quickly as they are designed to cater to emergency situations. If your credit score and other financial details are in order, banks submit funds in your account within hours. However, in certain cases, it could take one or two days too. But, in most cases, that’s about it.
* No guarantor or collateral required: Personal loan processes are minimal. Most of the typical requirements are dropped. As a non-secured loan, you don’t even need security or a guarantor.
* Use it as you want: In case of most other loans, the amount is not submitted into your account. For home loans, it is submitted into seller’s account. For a car loan, it is submitted into the car retailer’s account, so on and so forth. But, when you take a personal loan, you can spend the money as you want to and when you want to.

* High interest rate: Personal loan interest rates are higher than secured loans like loan against property or gold loan. So, it has higher EMI and a relatively larger part of your repayment goes into interest rather than principal amount.
* Repayment ability: Since the lenders estimate your value as a potential borrower by your earnings. So, if you have not paid EMIs in previous loans or you have low credit score, your personal loan application would get rejected. Repayment ability is your only eligibility criterion. Surprisingly, lenders are stricter in ensuring that you meet their eligibility standards well enough.

So, if you look at these loans holistically, it is a great way to meet the unanticipated demands of life. You can pay medical bills. You can steer away from some financial trouble. But, it will be temporary as these loans need to be paid off with huge interest. If you have collateral to offer, you should. But, if you don’t, a personal loan is the best shot for the emergency funding you need.

The author is a seasoned writer on finance topics, and her articles help readers manage money matters more efficiently. She writes about a variety of topics on personal banking services covering car loan, home loan, credit card, debit card, insurance, personal loan in India etc.