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The unprecedented COVID-19 pandemic has hindered business operations due to which millions of people are either out of jobs or funds to manage immediate financial requirements like education, medical, personal loans, and travel.

Now that the second wave of the COVID-19 is hitting some Indian cities, people are drafting budgets and being wary of expenses to avoid future financial crises. However, unexpected expenses could knock on anyone’s door at any time. They are usually in the form of medical emergencies, children’s higher education, or a family member’s wedding.

A personal loan that serves multiple purposes can help you tide over financially challenging times. It is a convenient way to deal with emergency requirements because it is a collateral-free loan. Booth salaried and self-employed individuals can avail of flexible repayment tenure, the maximum loan amount, and attractive interest rates.

The purposes a personal loan can serve 

  • Home renovation: Homeowners with the need to renovate, carry out repairs, interior works, etc can avail of a loan and fulfill their needs without paying hefty fees to contractors.
  • Wedding: A personal loan is the best tool to manage the wedding expenses of a loved one. It can take a huge burden off of your shoulder.
  • Higher Education: There is nothing more important than your child’s education. The rising college fees can put you in a financially bad situation. However,  personal loans could assuage that pain.
  • Medical: In times of medical emergency where you or a loved one needs urgent cash, it is probably the best available option to look after yourself or your family’s health.

Advantages of personal loans

Through personal loans, you can usually avail yourself of up to Rs. 20 lakhs and secure interest rates starting from as low as 14%. Here are certain benefits of applying for personal loans.

Improve credit score

Your credit score is calculated based on your credit history and profile, and lenders offer loans to borrowers with good credit scores. Now, if you have credit card debt that impacts your credit score, you can take personal loans and pay off your credit card debt, and improve your credit score. You can pay the loan amount within five years.

Collateral-free 

Unlike secured loans, a personal loan is an unsecured loan that doesn’t require pledging your personal or commercial property to avail of funds. Anyone that meets the eligibility criteria and has complete documents required by the bank can apply for a personal loans.

Flexible repayment tenure 

A personal loan’s repayment tenure can either help you manage your finances well or make it difficult for you to repay on time, depending on the tenure range. Usually, a loan’s repayment tenure ranges from 1 to 5 years, offering consumers the flexibility to pay the loan amount along with interest on time.

Minimum documentation

The documentation process to take a personal loan is simple and convenient. Most lenders require the below documents:

  • Duly signed personal loan application form
  • Colorer photograph
  • Identity proof: Aadhaar card, PAN card, Passport, Driving License, Voter ID card, Utility Bill – anyone.
  • Address proof: Aadhaar card, PAN card, Passport, Driving License, Voter ID card, Utility Bill – anyone.
  • Bank statements mentioning preceding 3 months’ salary
  • Salary Slip: For loan below Rs. 7.5 lakhs: 1 salary slip, and for loan above Rs. 7.5 lakhs: 2 salary slips.

Debt consolidation

At times, we take multiple debts based on our requirements, but that puts us in a situation where we have to pay multiple EMIs and interest rates which costs us more due to which we end up penniless at the end of the month. However, personal loans can be used to consolidate your debt. You can pay off your multiple debts and then will have to pay only one loan.

Read also: 7 Tips for Any Startup Business to Growing Online

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