A personal loan is borrowed money you can use for debt consolidation, emergency expenses, large purchases, vacation costs, and many more things. The loan is paid in the form of monthly instalments over a tenure that is usually decided by the borrower.
How does Personal Loan work?
A personal loan is an unsecured loan, thus there’s no need to mortgage your house or have any other collateral in order to get the money. Most of the personal loans offered by banks have a fixed interest rate, which means you will be paying the same EMI every month. If you get a personal loan approved, the fund will be deposited into your bank account in a day or two. In some cases, it might take a couple of hours for funds to be credited into your account.
Should You Apply for a Personal Loan?
A personal loan is a good option for those in need of quick money to pay for an unwanted or important expense. Since the interest rate of a personal loan is lesser than that of a credit card, it is a good option if your credit score is high.Before applying for a personal loan, do weigh the pros and cons. You should not put yourself into debt after taking a loan, thus, be prepared for the monthly EMIs. If you think that the monthly budget will be deeply impacted by a personal loan, explore other options to obtain emergency funds.
Why Prefer a Personal Loan Over Other Loans?
There are many financing options right from credit cards to home equity loans. So, why should you choose a personal loan over others? The reason is the interest rate of a personal loan is less than that of a credit card and funding is faster than that in a home equity loan.Another reason to opt for a personal loan is no collateral attached, which makes this type of loan less risky than mortgaging your vehicle, home or savings account.
Applying for a Personal Loan
The first and foremost step to apply for a personal loan is to compare the interest rates by different lenders. Check out online lenders, credit unions and other banks to find out their interest rates. If you want to stay away from all these hassles, look for an online personal loan. IndusInd Bank, for instance, offers personal loans that can be applied online and is 100% paperless. You can fill out their loan application online, submit a verification document, and if approved, the amount will be transferred to your account in a couple of hours or a day.
The Bottom Line
There could be many reasons to apply for a personal loan but remember that it has to be paid back. You are borrowing money to organise that wedding or consolidate debts or make a foreign trip, which should be returned along with the interest. So, you must utilise the loan amount responsibly.