Reasons Why You Must Choose Personal Loan in 2024

Unlike a home or car loan, a personal loan is not secured against an asset. To avail this type of loan, the eligibility depends on factors such as employment and credit history, repayment capacity, income level, etc. Your CIBIL score is the main deciding factor in whether you can avail a loan or not. Generally, a CIBIL score of above 750 is considered excellent which in turn makes it easy for lenders to approve the loan without any further delay. To avail a personal loan is not only easy as there is no need for collateral but the hassle-free process with minimum documentation makes it a popular option among borrowers.

Lenders do not restrict borrowers on how to use the funds. Whether it is for medical expenses or a wedding, foreign travel or study abroad fees, home renovation or short-term cash. It can be used for any financial need of the individual. Both banks and Non-Banking Financial Institutions (NBFC) offer personal loans with varying interest rates. It is of utmost importance that borrowers carefully study the terms & conditions of the lender. Moreover, this type of loan seems to be a viable option because it is less expensive when compared to credit cards.

Top Reasons to Choose a Personal Loan

No Restrictions on Its Use

You can borrow a considerable amount with a personal loan without any restrictions on its use. Depending on your needs and credit history, most lenders offer up to several lakhs of INR. Whether you want to go on a shopping spree or upgrade your home with new appliances and furniture. It helps you fund your big purchases like your extravagant wedding. All you need to do is get in touch with one of Muthoot’s representatives or any personal loan provider of your choice to apply for a quick and easy personal loan.

Simplified Access

Personal loans are unsecured loans, you can avail this type of loan without pledging any valuable assets as collateral. Hence, it is an excellent financing tool for big-ticket purchases with no risk to your assets. For the eligibility of a personal loan, lenders need to consider your profile, your credit score, and your financial history before they approve your application.

Tip: Always keep your credit score at 750 or above to qualify for a personal loan.

Instant Disbursal Serves as an Instant Solution

It is easy to apply for a personal loan, as you can either visit the nearest branch of your lender or apply online. The lender will then verify your documents and you get the approval within minutes. Following that your loan amount will be disbursed within 24 hours, so you can answer your urgent needs. For example, it can be useful in emergencies, such as medical procedures as it requires minimal paperwork and can be disbursed quickly.

Flexible Repayment Options

While securing a personal loan, you should consider a flexible repayment option to manage your finances better. Most banks and non-banking financial companies (NBFC) offer personal loans that you can repay over 1 to 5 years, while some offer short-term loans that need to be repaid in 2 to 3 months. Compare the options, such as tenure and the interest rate on personal loans that your lender has to offer. Choose a provider whose terms & conditions fit your budget best.

Minimum Documentation

The processing time required for a personal loan is relatively much lower than for other loans. As an Indian citizen, you can get a loan with the following documents: ID proof, address proof and income proof. Based on your credit score and history, some providers pre-approve a personal loan and you may not even need to submit any documents.

Factors that Affect Personal Loan Eligibility

Before you apply for a personal loan online, you should know about the different factors that impact your eligibility. Some of these factors are mentioned are:

• The area where you live plays an important role in determining your eligibility for a personal loan.
• If you are already repaying other loans your eligibility for a new loan will be affected.
• If you live in your own house, you have an increased chance of getting your personal loan application approved.
• The higher a person’s income, the higher the loan amount they are eligible for. So, it may be said that your personal loan eligibility also depends on your income.
• Your credit history and score have the largest impact on your eligibility. The tenure, the interest rate, and the total loan amount that you can borrow will depend on your credit score.

Tip: Personal loans when used judiciously can help you improve your credit score.

With banks and NBFCs competing against each other, availing a personal loan in the 21st Century is more simplified than ever. However, before you apply for a personal loan you need to keep your financial goals in mind. Look at the credibility of your provider and the quality of customer service they offer. Before applying, the borrower must do a thorough research. Analyze all the advantages and disadvantages of different lenders and read the loan documents carefully. Lastly, compare the interest rates, flexible repayment options and a suitable tenure to manage your finances better.