The major things about contingencies are that they come unannounced. They can arise owing to accidents, medical conditions, unexpected travel, unexpected car repairs, etc. Here is the next thing; unforeseen exigencies can happen to anyone. It can put a lot of stress on savings, and in case one does not have the required ready capital to mitigate the expenditure, they may be propelled to borrow. However, it may not be simple to take up a high credit amount from family and friends on short notice. What can one do on these occasions?
The evolution of the BFSI sector in the past few years has brought in various new institutions and instruments that serve the credit requirements of diverse populations. A personal loan like SBI personal loan, SBI Xpress credit loan, etc., has acquired great popularity for being a source, which is hassle-free for obtaining credit, specifically in the course exigencies. Listed below are ways how personal loans can help in times of cash crunch.
Read this as well: Is It Always a Wise Idea to Apply for Loans?
A personal loan is amongst the most known types of unsecured credit options that can be availed from financial institutions or banks without pledging any security or collateral. Such credit options are generally granted immediately and can be utilized to mitigate any personal financial exigencies without any precautions. An immediate personal loan can be utilized to mitigate unexpected costs, consolidate debt, refinance old debts, fund traveling expenses, make home renovation, medical emergency and ameliorate credit score, etc. Dissimilar to other secured credit options, one can utilize funds as per their requirement and flexibility. What is more, few personal loans may also assist in tax saving.
Personal loans offer financial leverage that can go beyond one’s monthly earning and assist meet unexpected expenditures to help grow your business. Features such as simple borrowing procedures, no security or collateral, instant disbursals, etc., make personal loans a crucial solution for applicants in times of urgent fund requirements. Here are some of the reasons how personal loans serve to be a good enabler during financial crisis times.
One of the major advantages of a personal loan is its simple accessibility. Many of the lenders have simple credit application processes, which can generally be undertaken digitally. For example, SBI Xpress Credit Loan, an SBI personal loan, provides easy access through their app or website.
Once the personal loan application process is completed, approval is given instantaneously, provided the eligibility conditions for a personal loan are fulfilled. Note that many of the financial institutions and banks process the application for a personal loan within 2 to 7 working days. There are even many digital lenders who promise to approve the personal loan application within the same day of the loan application.
Submitting the asset as collateral in the course of the loan process can be highly challenging for many individuals. For personal loans, most banks and other top leading financial institutes do not need security or collateral for unsecured personal loans.
Few applicants can even get specific tax benefits on personal loans. As per IT Act, if the user takes up a personal loan for renovating their home or making a down payment for the same, then they become eligible for claiming the tax deductions of up to ₹ 2 lakh as per Section 24(b) of the IT Act. It is another way of saving money on investment if one urgently requires undertaking home renovations and repairs.
Also Read: Can You Buy a House with a Personal Loan?
Overcoming financial setups or other disruptions in life generally takes a lot of time, and repaying such high loan EMIs during the process can make it difficult to stand back on your feet. However, most financial institutions provide their consumers with the option to select the most appropriate repayment plan as per one’s financial health, which can assist them in balancing their budget in a better manner. Such smart repayment plans make the personal loan a highly attractive option for applicants as they provide good control over the repayment process.
Dissimilar to a car or home loan, a personal loan does not have any kind of restrictions. The applicant is free to utilize the fund for any reason. For instance, in the course of medical emergencies, one is required to pay the medical bills, buy medicines, and pay for accommodation in another city. Freedom to use the personal loan amount as per one’s discretion is simply a big benefit.
Today, there are several NBFCs and banks present in the market that offer unsecured personal loans, which equates to the provision of competitive interest rates to customers. With numerous choices available to applicants today, they can pick as well as select from where they can get a suitable interest rate and loan terms. Despite charging a higher rate of interest as compared to secured credit options, personal loan rates are generally lower than credit cards. Credit card companies generally charge higher interest rates on any loan variant, while personal loan charges a lower rate of interest, which means they can be a good substitute for credit card debt.
Applicants can avail of fund proceeds of up to Rs 40 lakh from banks or NBFCs without submitting any security or collateral. Note that the loan amount approved basically depends upon the applicant’s repayment/credit history.
The next important benefit of personal loans is they can assist in ameliorating your credit score. While a credit score may naturally not be the top concern of many, it is crucial to have a good credit history & credit score of 750 and above to avail of a personal loan in the future to meet any immediate financial emergency.
A personal loan thus is a good medium to mitigate sudden massive expenses like home renovation, medical emergency, or car repair, etc. A personal loan makes sure you do not end up using the savings in a crisis and continue to fulfill your month-on-month financial obligations in the future without any difficulty.
Next, Read: 6 Common Personal Loan Mistakes You Must Avoid
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