The loan market in India has changed and evolved drastically in the past few years. While earlier the Indian loan market was more geared towards complicated, secured loans, the focus of the market has shifted towards easy and unsecured personal loans. With the rise in the economy, ease of record tracking, and faster access to credit, many people are opting for personal loans. However, there are many more propelling factors that are compelling people to consider a personal loan for their needs. Let us check them out –
7 Top Reasons Why People are choosing Personal Loans –
- Minimal paperwork
This is perhaps the most basic and most popular reason why people are choosing a personal loan, especially using an online loan app. Unlike conventional lending institutions which require reams of paperwork, you can search for the best instant loan app on your phone and complete your loan application in just a few clicks. The KYC is also done in digital format and verification can be done through a video call. The entire process of your loan application is completed in just a few minutes.
- No need for collateral
A personal loan is an unsecured debt which means you do not need to submit a collateral for guarantee. All collateral-backed loans take a very long time in processing because there are so many steps involved in verification, authentication, and hypothecation of the collateral. Plus, in many cases, an applicant might not even be able to arrange for collateral. A personal loan, on the other hand, does not need collateral but it is based on the due diligence done by the lender about the information furnished in the loan application which makes it overall a much more attractive option for a much wider range of target audience.
- Flexible loan ticket size
Another key advantage of personal loans which has led to their increasing popularity is the high degree of flexibility in loan ticket size. You can avail a personal loan from any of the lenders that offer the best deals and choose from a wide bucket of loan sizes. Online loan apps can give you a loan starting as low as a few thousand rupees to multiple lakhs of rupees. The very nature of a personal loan is such that it does not involve a lot of overhead costs, for example, there is no cost of collateral verification. This allows lenders to be very flexible in their loan ticket size.
- Fast loan processing
While processing times for personal loans have always been rather short, if you consider the best instant loan app, you will find that it is possible for someone to have the entire loan process from application to disbursal done in a matter of minutes. Compare this to the conventional lenders who may take days or months to furnish a loan. In many cases, a person might need the loan amount to address an emergency, such as medical bills or unforeseen expenses, and at such times, the fast loan processing makes a world of difference.
- Attractive interest rates
One reason many people are now choosing to take a personal loan is that these loans are now available at interest rates that are very close to other loans. Gone are the days when the interest rate difference between a home loan and a personal loan was as much as double! Today with the reduction of loan processing costs, the rise in a competitive market, and the simplification of the regulatory structure, it is possible for everyone to avail of a loan at an affordable interest rate. People who want to borrow can easily find good interest rates on the best instant loan app.
- Flexibility of use
Another important factor that makes a personal loan more attractive than other types of loans is the fact that you have complete flexibility in terms of how you use the loan. With a home loan, you are bound to buy an identified property. With a car loan, you are only given a loan to buy a car. But there is no such limitation or specification in a personal loan. You can use the personal loan money for any purpose, be it for medical, travel, shopping, or for weddings. With a personal loan, you have the luxury to choose how you spend the money.
- Good way to build a strong credit score
A credit score is very important for you to be eligible for any loan. But if you have never availed money on credit from a registered lender, then your credit score would be reflected as ‘NA’. Many lenders see this as a high-risk borrower, and they may either reject your loan application or offer you a loan at a very high-interest rate. So, if you are planning to avail a home loan or a car loan, you can first apply for a personal loan for a small amount. Repay the instalments on time and build an excellent credit score.
With the growing income of middle-class Indians, the rising trend in double-income households, and secured employment in different sectors, today people are more confident about their repayment plans. This has also resulted in a change in the lender’s approach, ease of processing the loan, and simple eligibility criteria. All these factors have cumulatively made personal loans a very attractive financial tool that is available at disposal for all and any need.