Amongst the wide range of lending options offered by banks, NBFCs, Fintechs etc., personal loans have always remained one of the most popular credit facilities availed by consumers. Over multiple decades, personal loans have been continuously playing the role of saviour for many borrowers, thanks to the numerous benefits they possess and offer to them. For whatever reason you need funds in life, personal loans have an answer for everything, thus making them an imperative choice amongst those who require funds.
Let’s check some of the primary top benefits of personal loans and what to keep in mind when applying for them:
One of the quickest dis bursal of funds
Quick disbursal of funds is one of the prime benefits of personal loans, which makes them a suitable and popular credit option for those in need of quick money for urgent monetary requirements such as a medical emergency or even for a planned expenditure like a trip abroad or home renovation. Most of the personal loan options, including a personal loan for government employees, are disbursed within a few days of getting the application, with some lenders also claiming to disburse near-instant personal loans in case of online personal loans for pre-approved customers.
No collateral or security requirement
Personal loans are unsecured in nature, whether they are for entrepreneurs, self-employed or personal loans for government employees. This implies that they do not tend to involve any requirement of pledging collateral or security against the borrowed amount. This crucial benefit acts as a facilitator for quick disbursal of funds of personal loan, thus saving time for both lender and borrower.
Minimal level of documentation
Personal loans, given their ease of access and the simple nature of the product, require just the basic level of documentation like income and identity proofs, depending on varying eligibility creation and documentation requirements of different lenders. The presence of minimal documentation is what actually enables this credit option to provide a smooth and hassle-free process to the borrower. As soon as the verification of the required documents and credit profile check of the applicant is completed successfully, disbursals don’t take up much time and are done within a few days. Ensure you are ready with adequate documentation when applying for a personal loan for government employees. It would be a wise step to also assess your EMI affordability before submitting a loan application. Also, if you possess an existing insurance policy, you can explore options like a loan against a LIC policy, as these offer loans against a particular amount (%) of the lic policy taken by the policyholder requiring the loan. This can especially be helpful for those facing difficulty or denied a personal loan.
Zero restriction on end usage of loan proceeds
Another key benefit of personal loan for government employees is the absence of restriction on the end usage of funds obtained from loan proceeds. Personal loans involve zero restriction on the end usage of funds, except for speculative purposes. Funds availed in the form of loan amount credited can be used for numerous purposes like wedding expenses, medical emergencies, home renovation, business expansion, holidays abroad, etc.
Wide range of choice amongst lenders
Lots of lenders, including numerous banks, fintech, as well as NBFCs, provide personal loans as a key product. With such a wide choice of lenders to choose from, it becomes prudent to check and compare their wide-ranging interest rates and other features as well before zeroing in on any. Do the research for as many lenders as possible. To begin with, check with your existing lender with whom you have any form of consumer relationship like a savings account, loan, credit card, fixed deposit etc. See what personal loan offer they have for you.
Then, check with other lenders and post comparison, go for the best deal as per the most suitable lender offering personal loan as per your credit score, income, employer and job profile, etc. Make sure to not just compare their interest rates but also other features like loan amount, processing fees, tenure, etc. You can check the expected EMI amount according to the loan amount and applicable interest rate and also explore the loan against LIC policy in case you are exploring an alternate credit option.
Moreover, keep in mind that even for relatively safer employment profiles like government jobs, personal loan for government employees are only given post the credit evaluation process, and the credit risk appetite of lenders also comes into play. As all these criteria tend to vary widely amongst lenders, the chances of a personal loan applicant’s approval and also the interest rates charged for that loan can vary amongst lenders to a large extent. This makes it imperative for prospective applicants to compare amongst numerous lenders to get the best personal loan offer as per your eligibility and financial requirement.
The facility of EMI calculator tool to arrive at affordable EMI
Another beneficial feature of personal loans is the EMI calculator tool available from various lenders. Before submitting an application for a personal loan, it’s always prudent to check your eligibility for a loan against LIC policy as well, as the former is an unsecured loan having quite high-interest rates, whereas a loan against an insurance policy might turn out to be cheaper. Whatever loan you take, ensure to factor in your existing monthly obligations and contributions towards earmarked financial goals during the process of selecting your repayment tenure. Avoid going for an aggressive repayment schedule by choosing short loan tenure. Although doing so would lead to lower overall interest cost, but it can result in laying stress on your financial health due to higher EMIs, which may land you into Doing so may force you to avail costlier loans to adequately deal with unforeseen financial exigencies and/or achieve earmarked important financial goals of life.
What to keep in mind before submitting a personal loan application?
While the unsecured nature of personal loans results in lenders usually adopting a much more cautious approach while evaluating personal loan applications, some vital steps can boost approval chances and eligibility. These include- checking your credit score and taking corrective steps to improve it if required, restricting monthly loan repayment obligations within 50% of net or gross monthly income, avoiding submitting multiple loan applications to lenders, especially within a short time span, and refraining from frequent job switches when planning for a personal loan.