Monday, December 19th, 2016
Why personal loans are now more important than ever
Why personal loans are now more important than ever Personal loans are probably more convenient than the other loans, and now they have become more popular and important than ever. If you are rather new to this term, a personal loan is an amount that you can borrow at an interest rate which can be used for various purposes, according to your discretion. From funding your education to taking a vacation or renovating your bathroom, you can use personal loans for almost anything you wish. Now, a personal loan can be of two types – secured and unsecured. A secured personal loan requires collateral like a house or a car against which you can take the loan. So, if you default, the creditor can take that collateral asset. An unsecured loan, on the other hand, does not require any collateral, but since it can be a high risk for the creditor, this type of loan generally has a higher interest rate. Here are some of the reasons why personal loans are more important than ever in India. Personal loans are unsecured As mentioned above, many banks and lending platforms do provide unsecured personal loans, and that means the individuals who might not have any collateral to take a cash loan, can still take it for a quick cash flow. Short repayment periods Since most personal loans are of small amounts, as compared to house or car loans, their repayment periods are also short. Of course, you can choose a fixed repayment period according to your requirements, but you should know that even though a longer repayment period will lower the monthly loan amount, you will end up paying more in interest. In some cases, the interest rate might be tied with the repayment period. Personal loans are personal The best part about personal loans is that they are personal. In India, unlike house or car loans, you don’t need to provide proof to the bank about what you really want to do with the money. So, you might need some money for your house’s renovation and your kid’s education; you could take one single personal loan for both the purposes. Easy paperwork Since you don’t need to provide much information about how you want to use the money, the amount of paperwork also decreases. Though, that does not mean that banks provide any kind of relaxation when it comes to the other documents. When you apply for a personal loan, make sure all your documents are updated and in order. The issue with taking personal loans from a bank First of all, banks have high-interest rates for unsecured personal loans, some of the top banks in India charge as high as 19%. Secondly, just because banks take high interest against no collateral doesn’t mean they don’t check your credit scores. Banks give the loans after checking the credit score, and in fact, your future credit score could be impacted if the current personal loan isn’t paid on time. If you have been thinking about getting a personal loan but it has been a struggle for you because of the interest rates and credit scores, we recommend going for an online lending platform like CASHe through which you can get a short term instant loan in less than 8 minutes, and it provides easy repayment options as well. Personal loans have evolved over the years to meet the changing needs of the consumer. It used to be nearly impossible to get quick loans with a limited or bad credit history, but today there are loan options for people with bad credit and nearly every other type of consumer, that too online!