Personal loan is the most reliable form of loan during the emergencies. It is the favourable option when one desires to meet any lifestyle requirements like renting apartment, buying new products like fridge, cars or air conditioners or home improvement etc. It is the financial instrument that is designed to meet the financial needs at different stage of life.
Personal loan is of unsecured nature, thus it does not require the borrower to pledge collateral against borrowed sum. Traditionally, there was a standard personal loan available to meet all type of needs. It has gained more preference as an option of debt since the new age lenders have customized the personal loans to meet specific needs arising at various stages of life. These new age loans offer flexible repayment options which are designed by the lenders by keeping in mind the monthly cash flows of borrowers. These loans provide greater flexibility of repayment and offer options to reduce monthly outflows towards EMI and save more.
When personal loan can be used?
When uncertain time comes, the ideal scenario is to dip into the funds that are saved for the rainy days. As a good saving always come handy to meet the daily needs, debt repayments, medical emergencies or any shortfall arising due to any crisis. In case you haven’t prepared to fight the crisis, personal loan is the best option that you can opt in order to control the situation. There are different situations where personal loan serve as a suitable form of credit. Some of the situations are listed below:
- Medical Emergencies: It is one of the top reasons why one may apply for personal loans. The emergencies arising out of uncertain health conditions need to be addressed at the earliest. Sometimes people having health insurance cover also have tough time paying bills. At time like this getting personal loan is the best option to pay bills as it requires minimal documentation. The digital lenders have made it possible to get the funds in less than 24 hours which help you tio pay the bills in emergencies.
- Unstable job conditions: A crisis often brings most unstable conditions. As we all facing the COVID-19 pandemic which had affected the entire salaried segment in world. If you are amongst the class of people whose jobs are at stake, then you might find it difficult to sustain the daily expenses within your monthly salary. In situation like job loss or uncertainty at job you can opt for personal loans to meet the daily needs until you get the stable job. At time like this you will not want to burden yourself with heavy EMIs. Lower interest rates and flexible repayment structures should be the utmost priority at these times.
- Outstanding debts: In critical times, borrower would be worried about the obligations that he/she availed through debts. If you have credit card bills and other outstanding dues against your personal loan, you should opt for Debt consolidation at such times. It is wise to opt personal loan for debt consolidation and to close all the expensive ongoing debts. You can also choose to consolidate your personal loans by opting for a loan than dictates lower rate of interest. This ensures that you lower your obligations and avoid debt trap situation during any crisis.
- Meeting the ends: As you face any crisis situation, it naturally commands change in spending habits. There is change in priority of commodities that you choose to spend on. During any crisis spending on luxurious and expensive gadgets become a big no. Health, medication, daily necessities take the front foot at this time. There are some expenses like utility bills, debt obligations, school fees etc. that we cannot neglect even after making cost cuts.
Eligibility criteria and document required for personal loans
Eligibility criteria and policies differ from lender to lender. The basic eligibility criteria that are followed by all lenders are the parameters such as age, employment, income and serviceable cities. These are the basic criteria that will help you to decide whether you should apply for a loan or not. A lot of other credit parameters play vital role after you apply for the loan. Before choosing the lender for your requirement, you must qualify for the loan by carrying out the necessary personal loan eligibility checks, the related information of which you shall find on the lenders website.
In order to get personal loan, you need to provide the documents that will verify your identity to lender and the information that you provided in the application. The documents demanded by the lenders are:
- KYC documents: PAN card, Aadhar card. Address proof
- Income documents: Bank statements, salary slips
You must ensure to provide authenticated documents in order to avoid getting rejected for the loan.
What should be your CIBIL score to get personal loan?
CIBIL score is also known as credit score. This is the three digit number that is calculated by the CIBIL (Credit information Bureau of India limited). Credit score defines your credit history that includes borrowing and repayments of debts. Most of the lender rely on your credit score before deciding on an individual personal loan application. The range of credit score is 300 to 900. The desirable credit score considered is 650+. The higher your credit score better are the chance of getting approval for your personal loan application.
Personal loan is a form of loan that is designed and customized to meet unexpected, unplanned and sudden demands of funds. Your credit habits will have direct impact on your credit history and credit score, so you must ensure to service your EMIs responsibly. It is essential to take right measure to keep you creditworthiness intact.