Benefits of Personal Loan To Raise Funds
31 Oct 2022
Table of Content
There are times in everyone’s life when there is a sudden need for money. The immediate choice is generally to use a credit card or to borrow money from friends or family members.
With Net banking now in place and more lenders chasing fewer borrowers, raising money through other sources is now possible at a faster pace.
Gold loans are normally a preferred and cheaper source of the loan, where banks and gold loan companies process the papers fast to give the borrowers the money he or she needs. However, personal loans are now being offered at a faster speed too. There are lenders who advertise that they will disburse the loan within a day.
Under such circumstances, it is always better to go in for a personal loan rather than using your credit card to meet any emergency need. Firstly, because the personal loan is far cheaper than any credit card loan and secondly because the personal loan can be of a bigger size than what the credit card can offer.
But before one takes a personal loan it is important to have a good CIBIL score. With a CIBIL score of over 750, a person can be choosey in picking up the personal loan with the lowest interest rates. A person with a lower score may still get a personal loan but the interest rates may be higher.
The biggest advantage of a personal loan from the point of view of the borrower is that it is an unsecured loan. The borrower need not pledge or mortgage any of his assets to raise funds.
Benefits of Applying for Personal Loans
Urgent Financial Requirement
If there is an immediate need for money, personal loans are the best option. They are considered better than credit cards or loans from family members or unorganized lenders, since the rate of interest is reasonable and the lender is a credible organization. Credit cards come with strict credit limits, which is not the case with personal loans. Funds taken from the bank as personal loan also resolve the issue of certain vendors not accepting payment through credit cards.
Breathing Time For Repayment
Also, the credit card bills need to be paid off by the due date which generally falls in the next month whereas you get some breather in repaying a personal loan EMI over a period of time, generally ranging from 3-4 years.
Flexibility Of Use
Funds from a personal loan are flexible in the way you use them. They can be used for several purposes- home renovation, travel, wedding and medical expenses or for any other purpose as per one’s personal obligations...
The loan amount you can borrow under a personal loan is also significant. For example, with Bank of Baroda offer personal loan amounts based on the eligibility of applicants.
Personal loans may also be private loans since these loans are often used to meet cash requirements or personal contingencies and thus kept private to a great extent.
Flexible Repayment Structure
These loans are generally of the nature of short to medium term loans and come with a flexible repayment structure.
Easy To Get
For example, Bank of Baroda is popular for personal loans that are quick to get, fast processing, minimal documentation required and offered at attractive rate of interests. Most salaried persons, self-employed and professionals can apply for these personal loans.
What are the Tax Benefits of Personal Loans?
No tax benefit is available in Personal Loan. However, if loan avails for purchase of dwelling unit, one can take tax benefit under section 80 C (the principal portion of the EMI paid for the year is allowed as a deduction under Section 80C subject to maximum amount that can be claimed is up to Rs.1.50 lakhs). The interest portion of the EMI paid for the year can be claimed as a deduction from total income up to a maximum of Rs.2.00 lakhs under Section 24.
Why Choose Bank of Baroda Personal Loan?
Bank of Baroda offers a swift and hassle-free personal loan that comes with several benefits such as providing emergency funds, added advantage over credit cards, no strict credit limits, pay via cheque and bank transfer or cash facility, extended timelines for repayment, flexible usage of funds, and higher borrowing amount. Visit Bank of Baroda Personal Loan to know the complete details and apply for a personal loan.
Personal Loan: Borrower’s Guide – Do’s and Don’ts
- While taking a personal loan is easy, it should be taken only in case of emergency.
- Check the rate of interest provided by your bank
- Check the eligibility criteria and the documents required for personal loan
- Calculate the EMI for your personal loan
- Personal loans, being unsecured are costly. It would be foolish to buy an asset with a personal loan, especially when there are financial products available these days to buy a mobile or any other household equipment.
- One should avoid using personal loans to repay loans that are cheaper in cost. But they can be used to repay higher cost loans like credit card bills or something similar.
- If one is using personal loan to meet the operating expenses of the house then he or she is falling in a debt trap.
- One loan will lead to another and before the person understands it, he would have fallen in a debt trap.
- Rather than using the personal loan as a saviour to come out of the debt trap the person would have fallen in it using personal loans.
- Personal loans should be used only for intermittent emergencies.
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CIBIL Score for A Personal Loan
Do these lines look familiar to you? You must have come across such messages while inquiring or applying for a personal loan. Well, CIBIL score or credit score is one of the common types of checks in the basic Know Your Customer (KYC) documentation process for personal loan approval.