Advantages Of Personal Loans

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Personal Loan:
Personal loans are handy financial tools for emergency needs. They can help in recovering from a financial crisis or taking care of large expenses. For purchases that are not covered by other types of loans, individuals may use personal loans for covering expenditures, for instance, those related to a wedding, home renovation, or a big vacation. Personal loans are a form of unsecured loans. It means they do not require any type of collateral in the form of cash or an asset. However, this also results in high rates of interest.

Applying for a Personal Loan:
Applying for a personal loan is a simple process at all but getting it approved may be a different matter. As per the bank’s procedure, you would have to submit some documents
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There could be a number of reasons why this happens. One of the common reasons is that you are listed as a guarantor on a loan that has defaulted, making you liable for it. The other common reason for a low score is incorrect information. Go through your credit report carefully and if you find anything that ought not to be there, initiate the process to get it rectified.

Features of Personal Loans:

Fast Processing: Personal loans do not require elaborate paperwork. This means fast processing. Most banks grant personal loans instantly if your credit history is good enough. The high interest rate of personal loans makes them a good profit building instrument for the banks as well. This makes them more willing to approve a loan when the applicant is determined to be low-risk.

Flexibility: Personal loans are flexible in nature. You are under no obligation to use the loan amount in a specific way. You can use it investing in your business, go on a vacation, pay for a wedding, make a major purchase, or renovate your home. Such flexibility from personal loans makes them a preferred choice for a number of situations, especially where unexpected expenses
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In financial jargon, this is referred to as DTI. But numbers aside, if anything about your current state of debt (or what you may lend up with if your loan is approved) makes you uncomfortable, chances are applying for a personal loan is not such a great idea.

• Above all, never take out a personal loan to satisfy an impulse purchase decision. Doing this is the polar opposite of icing on the cake.

Interest Rates on Personal Loans: If you have a good credit score, you can leverage it by negotiating a better interest rate. Chances are the bank will approve it. Further, do your research and find out the kind of interest rates that the bank provides. Beyond the percentages, there is one other crucial factor that not every bank executive is willing to reveal. For some banks, the interest itself is calculated in two different ways as explained here.

• Fixed Interest Rate: This type of interest rate means you pay a fixed amount of interest on the principal amount for the entire tenure. You would be paying the same interest till your final EMI on the full principal amount, regardless of the part you have already paid

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