Finance

When should you say a ‘yes’ to a persona loan?

Earning an income is a great way to manage your expenses and save your finances for the future. However, at some point in your life, you will fall short of funds, which will require you to seek an alternate source to gain the required finance that will fulfill the requirement. Amongst the different options that are available, the personal loan has been a viable one. Given below are the various reasons why you should say a yes to this loan in such a situation.

No collateral required

Most loans are divided into two categories, namely the secured and unsecured loan. In the secured loan, you would need to provide an asset of an equal or a substantial amount in comparison to the loan amount. In other words, you will be required to provide collateral.However, in an unsecured loan, you need not provide any collateral. This makes it easier to apply for a loan, without any hassle of getting the appropriate asset for security. Therefore, if you do not have any assets of relevant value and require funds, you can always opt for this loan for financial assistance.

Short processing time

As a part of the loan application process, you will be required to submit a certain set of documents pertaining to the loan you are applying for. For example, when applying for a business loan, you will need to provide the income tax returns, abusiness plan for the future and a document validating the reason for the loan and its usage towards the business. This is no different for the personal loan. However, unlike other loans, the persona loan requires minimum documentation, namely pertaining to your identity profile and income report. Such documents take a few hours or days to be verified and processed, thus reducing the overall processing time of a loan as compared to other loans. In the event you are looking for quick finances, the personal loan makes an exceptional option.

Repayment affordability

Every individual possesses different financial habits and different expenditures. This can lead to different financial requirements, especially when it comes to large expenditures. At this stage, you can opt for a personal loan amount that will fulfill your financial requirements. However, at the same time, you need to ensure that you can afford the loan. Keeping this in mind, banks and financial institutes set eligibility criteria which need to be satisfied before your loan application can be processed. In the process of verifying your loan application, your income, current debt to come ration and your credit score will be taken into consideration.

Apart from these reasons, there are plenty more you can refer to. In the end, however, the decision to apply for the loan and to repay it is your responsibility. Personal loans must only be used as a last resort to meet an unavoidable expense, as taking on any debt is a financial decision that can last a lifetime.

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