Financial emergencies don’t only drain our savings but also have a profound impact on our mental health. We all know that emergencies can come knocking anytime on our door. Therefore, it is wise to choose a personal loan for financing these urgent expenses. It will help manage high costs without immensely cutting down your monthly budget. Many modern financial institutions offer personal loans at competitive interest rates and have flexible repayment terms. If you are a salaried employee working in a reputed organization, you can quickly get a personal loan. Some institutions also have a specialized category of personal loans for salaried employees.
Important Benefits Offered by a Personal Loan
A personal loan is an unsecured source of credit that can be taken to meet urgent financial obligations. It doesn’t require pledging any collateral against the loan amount and can be processed quickly. Let’s take a quick look at the top 5 personal loan benefits for working professionals.
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No Restrictions on How to Use the Funds
One of the most significant advantages of getting a personal loan is that no restrictions are imposed on the fund’s usage. Borrowers have complete control and total flexibility in spending the borrowed amount. If you are unsure about how you will be allocating funds towards different expenses, don’t worry. The lending party will not ask a question related to the costs that one has incurred using the borrowed amount. One can use it for anything from financing education to home renovation or foreign vacation.
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No Collateral Needed
For secured loans, an asset is pledged as security to help recover the amount in case of default. Personal loans are unsecured and don’t demand collateral against the borrowed amount. Lending institutions can offer a loan amount of up to INR 25,00,000 as a personal loan, depending on the borrower’s credit profile. One doesn’t have to pledge any asset as security against the borrowed amount. This reduces the pressure associated with loans.
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Flexibility to Choose the Loan Tenure
Personal loan tenures can last up to 60 months in most cases. Borrowers have complete control over choosing the loan tenure, and they can pick any number between 12 to 60 (in months) as their loan tenure. A higher duration will lower the EMIs and vice versa. However, taking a loan for an extended period also comes with added interest costs. One must plan their budget carefully before choosing the duration of the personal loan.
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Quick Processing and Disbursal
Another key advantage of getting a personal loan is that it is not time-consuming. One can easily find a loan service provider online by searching ‘how to get loan online’. It is easy to submit an online loan application with the required documents. Once you have submitted all the information along with a digital copy of the documents, the processing will be done quickly, and the amount will be disbursed into your bank account.
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Tax Savings
If you are a salaried employee looking to get a personal loan, it can help you save a decent amount of money on account of taxes. If you are using a personal loan to finance your home’s renovation or make a down payment for a new home, you are eligible for a tax deduction of an amount up to INR 2 Lakhs. You need to back these expenses with relevant documents to claim these deductions.
Tips to Get a Personal Loan Easily
Here are some quick tips to help you get personal loans approved quickly.
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Maintain a high Credit Score
The first thing that one needs to do to get quick approval on personal loans is to build a good CIBIL score. A credit score of over 750 points can get your loan approved by any lending party. In addition, most financial institutions have minimum credit score criteria for approving loan applications.
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Keep a Lower Debt to Income Ratio
The debt-to-income ratio defines the percentage of total monthly income paid as a debt against existing loans. A lower debt to income ratio means that you have fewer loan obligations to meet and will be able to repay the loan amount easily. Therefore, keeping the debt-to-income ratio lower than 30% is highly recommended for a quick approval.
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