A personal loan is availed by individuals who need money urgently to meet their financial needs. While other loans, like a home loan or a car loan are given against some sort of security, a personal loan can be given without a security. Most banks only see if the borrower holds a credit card to approve a personal loan.
Here are some advantages of a personal loan that make it one of the best options for people seeking financial aid-
Can be used for various purposes
While a home loan can only be used to finance a home, or an auto loan can only be used to buy a car, a personal loan can be taken to meet any financial requirements. It can be used for a variety of purposes such as meeting medical expenses, organizing travel plans, educating children or even getting them married. Sometimes a personal loan is also taken in order to make home renovations and improvements.
Can be availed easily
One can get hold of a personal loan very quickly. In case of some banks, the loan approval and sanction of the amount takes about 24 hours only, depending on the urgency of the loan. Thus, in case of a sudden emergency it is best to get a personal loan.
The documentation required is minimal
As compared to a home loan or an auto loan, which require a number of documents to be produced at the time of loan application, a personal loan requires very little. Thus, the loan processes faster.
This may be one of the biggest benefits of a personal loan, it is unsecured. One can get hold of a personal loan without offering any security. The term of the loan is also shorter when compared to a housing loan or an auto loan. This ensures safety of assets.
Moreover, a personal loan also greatly improves one’s credit score as well as history, in short it enhances one’s credit profile to a great extent.
But while opting for a personal loan, one should also keep in mind that they should only borrow the amount that they can afford to repay. One should also try to clear their personal loan well before their tenure comes to an end, in order to maintain a good credit history.
Before opting for a personal loan, it is important to consider how urgent the money is and the purpose of use. While the loan can be easily availed and is quite convenient, default of any payment can result in problems.