Here's What You Can't Use A Personal Loan To Pay For

Here is the thing regarding exigencies; they come in unannounced. They may arise owing to a medical condition, unexpected auto repairs, an accident, unanticipated travel, home repairs, etc. Here’s another crucial thing; unforeseen exigencies can happen to anyone. This can put massive stress on your savings and if you do not have instant capital available to mitigate expenditures, you may be propelled to borrow. However, it may not be very simple to take up a high credit amount from your family and friends on short notice. What’s the solution in such a case?

The BFSI sector’s evolution in the past few years has endowed various new instruments to serve your varying credit requirements. Personal loans have acquired great popularity as it is a hassle-free and stress-free source of availing credit, especially in the course of financial exigencies. Let’s take a look at the personal loan and how this credit option can assist you during a monetary crunch. 

What’s a personal loan?

Personal loan by nature is unsecured that can be availed from financial institutions or banks without pledging any security or collateral. Such loans are generally provided to you instantly and can be utilised to mitigate any of your personal financial exigencies without any kind of pre-condition. A personal loan is instant in nature and can be utilised to mitigate unanticipated expenditures, consolidate debt, refinance old loans, ameliorate your score, travel, make home renovations, etc. Unlike other kinds of secured credit options, you can utilize the borrowed funds according to your flexibility as well as your requirement. Note that you can get a loan of any amount may it be a 2 lakh loan or a 40 lakh loan. Digital lenders like Paysense, MoneyTap, Lendingkart, Pine Labs, etc. 

How personal loan deal can assist you during a liquidity crisis?

Personal loan offers financial leverage that may extend beyond your month-on-month earnings and assist you to mitigate your unanticipated expenditures. Features such as a simple borrowing procedure, no security, quick approvals, and instant disbursals, make personal loans an important solution for you if you are in immediate need of funds. Here are a few of the important reasons why personal loan act as an important enabler during financial crisis times. 

Ease of access

One of the major advantages of a personal loan is it is accessible easily to you. Many lenders come with a simple loan application procedure and can be generally undertaken digitally too. For example, in the case of Paysense, you can get a Paysense application and fill out the application form, submit the KYC documents, and sign the loan agreement – all in just a few minutes. This is a prudent deal for you if you are busy dealing with the exigency as you can apply for the home loan right from your home, without the requirement for making multiple visits to financial institutions, filling out lengthy application forms and others. 

Instant loan approval

Once the application procedure for a personal loan is done, the approval is instantly granted, provided the eligibility criteria for a personal loan are met. Most financial institutions process the application for a personal loan within a few hours. At PaySense, all the eligible applications for the loan are processed and approved in 2-3 hours. 

No stress of providing security or collateral

Submitting an asset in the form of security or collateral during the personal loan process may be challenging for many. For personal loans, banks as well as other leading lenders do not need security or collateral as personal loan is unsecured in nature. If you mitigate all terms and conditions, you may be granted the required loan amount with zero conditions on how you must use the same.

Tax benefits

Few of the applicants can even get a specific tax benefit on a personal loan. As per the income tax act, if you as a user take up a personal loan for the purpose of renovating the home or making the payment for a down payment, then you are eligible to claim a tax deduction of as high as Rs 2 lakh under the income tax act of Section 24 (b). This is a prudent way to save money on your investment if you immediately require taking up home renovation and repairs. 

Smart repayment option

Recuperating from the financial setback or various other disruptions in life generally takes a lot of time and repaying a high loan EMI during the process can make it difficult to stabilize your finances. However, most lenders provide you with the choice to select the most apt repayment plan according to your financial behaviour, which can assist you to balance your budget better. Such smart repayment options make the personal loan a better option for you as a borrower, as such lenders provide massive control over your repayment procedure. At PaySense, you can better select among various flexible payment options through the online EMI calculator. 

Zero preexisting terms

Unlike auto loans or home loans, a personal loan does not have any kind of restriction. You are totally free to use the finances in any way you want, which thoroughly is advantageous in times of crisis. For instance, during medical exigencies, you require paying medical bills, transportation costs, medicine costs and even accommodation in distinct cities. The freedom to use loan proceeds according to your own personal discretion is a considerable benefit. 

Competitive rate of interest

Today, there are several financial institutions in the market providing unsecured credit options has enhanced considerably, which means you as a borrower can avail competitive interest rates. With a vast range of choices available in the market, you can pick as well as select from where you can avail the best interest rates and terms on your loan. Despite levying a rate of interest higher as compared to the secured credit options, personal loan rates are generally lower than credit cards’ finance charges. Credit card institutions typically levy a high-interest rate and personal loans at a lower rate of interest can be an excellent substitute if you are serving a credit card debt.  

By Rehan

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