A personal loan is any loan that is lent to you for a personal purpose. Meaning that it’s not for buying a house, a car, studying abroad or any of the other common loan types. The reason for this is that personal loans come at a higher interest rate and are usually not secured against a collateral. Also, other types of loans, like a housing loan, are classified as tax-saving instruments, which a personal loan is not.
The main purpose of a personal loan is to give you a surplus of cash when you’re running short. This can be in case of emergencies, any unplanned expenses, or a planned event like a wedding or vacation. While a specific type of personal loan comes with its own unique nuances, in general, the benefits of getting a personal loan are plenty. Some of them are listed below:
Today, personal loans, like most other things, have pretty much moved online, and the application process is entirely paperless requiring actual documents only in cases where an additional verification step is mandated. Most banks offer you a per-approved loan amount that can be disbursed almost instantly.
For starters, you can try getting your loan on Fi Money. It takes just under 5 minutes to open an account on Fi Money and then check for loan eligibility on the app.
The quick approval, or in some cases pre-approved, process leads to near-instant sanctioning of the loan and its disbursal. With a good credit score, you can get quick amounts at your disposal with affordable interest rates, leading to easily manageable EMIs. When you get a loan on Fi Money, you can set up reminders so you never miss your EMI payments.
Like we’ve said above, a personal loan serves diverse needs in various forms. Some of the common ones include:
Apart from these, you can use a personal loan to buy a used vehicle and even consolidate your debts by paying off your outstanding loans. This is also known as refinancing and can be a powerful financial tool. The benefits of refinancing a personal loan include:
Another really incredible benefit of a personal loan is that it generally does not require collateral. In other words, you do not need to pledge any asset in lieu of receiving a loan. All you need to do is apply for the loan and provide the requisite documents. If your credit score is appropriate and you meet the eligibility criteria, a personal loan will be sanctioned to you.
However, this is one reason why personal loans are so expensive. If you do have a good credit score, you can instead look for lower interest loans.
Many lenders offer you the choice to choose your repayment tenure. Remember that this flexibility comes at an additional cost of a longer repayment period, which means you’ll be paying more interest on your principal amount.
Taking a personal loan has its pros and cons, but all things considered, it makes for great emergency capital. Personal loans are unsecured, meaning that there is no collateral like a house or an FD against it. This also means that the interest rates are much higher than other types of loans. You could consider taking a personal loan when you’re tight on funds. Most banks offer pre-approved loans after a quick credit score verification.
You can get an instant loan directly to your Savings Account through the Fi Money app. These are pre-approved personal loans made available to select users with good credit scores. On Fi, this process is 100% paperless, and the loans are provided at competitive interest rates — where each user remains in control with complete visibility of all details. Plus, you can avoid EMI late fees by setting up automatic in-app payments. Our partner bank, Federal Bank, assigns an eligible loan amount to each user (up to ₹5 lakh).
A personal loan comes with far more than just three benefits. However, if you were to prioritise the benefits of getting a personal loan, then they are:
A personal purpose loan is a type of loan that individuals can obtain for various personal needs, such as debt consolidation, home renovations, medical expenses, or travel. Unlike specific-purpose loans (like home or auto loans), personal purpose loans are unsecured, meaning they do not require collateral and are based on the borrower's creditworthiness and ability to repay. The borrower can use the funds at their discretion to fulfill their personal financial goals.
Yes, you can generally use a personal loan for any purpose. Unlike specific-purpose loans, such as home or auto loans, personal loans are typically unsecured and do not require you to specify how you will use the funds. Borrowers have the flexibility to use the loan amount for various personal needs, such as debt consolidation, medical expenses, education, home improvements, travel, wedding expenses, or any other financial requirements they may have. It's essential to use the loan responsibly and ensure timely repayments to maintain a positive credit history and financial well-being.