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5 Personal Loan Benefits You Must Know Before Applying

Published on Mar 23, 2020Updated on May 7, 2024

5 Personal Loan Benefits You Must Know Before Applying

In our fast-paced and sometimes hectic lives, we rarely get the opportunity to make our little dreams and aspirations come true. However, the thought still lingers. For example, you may have had a lifelong dream to travel abroad on a dream vacation with your family. However, time and financial constraints force us to let our dreams take a backseat. At other times, we need quick funding so we don’t miss out on a great opportunity or to meet obligations on time in order to maintain our credibility.

This is where personal loans come to the rescue. Personal loans are unsecured loans procured for a variety of needs like going on a trip to an exotic location, organising a grand wedding, upgrading the look of your home through renovation or meeting unforeseeable medical emergencies.

However, you may be hesitant to take this decision due to various reasons. Given below is a list of personal loan benefits. If you feel that there are the kind of benefits you are looking for while choosing a financial instrument, then you can go ahead with your application.

Top 5 Benefits of Personal Loan

1. Hassle-free Documentation

While applying for a personal loan online, documentation is completely digital. The minimal documents that are requested can easily be uploaded along with your application online without too many hassles. This makes the process completely paperless. In addition to this, some lenders also provide the facility of the doorstep document collection.

The documents required are proof of age, proof of residence, proof of stable income, credit history, bank account information, etc.  The purpose here is to validate the information provided by you and ensure that all the information provided is authentic.

Personal loan documents can include:

  • A valid proof of identity which can be your voter ID card, driving license, PAN card or passport copy.
  • Any proof of address which can include a copy of your passport, rental agreement, telephone or electricity bill, ration card, bank passbook or statement, driving license.
  • Age proof which can include documents such as the passport, PAN card, or a certificate from a statutory authority.
  • Form 16
  • Income Tax Returns
  • Salary slips (for salaried) or income statements (for self-employed)

At SMFG India Credit, we strive to ensure a smooth, convenient process to help our customers complete their online application without any unsavory hiccups or discrepancies.

Must Read: Minimum CIBIL Score Required for Personal Loan

2. Simple Online Process

Gone are the days when you must visit a lender at their branch personally. Gone are the days when you must stand in interminable, long braided, slowly moving, serpentine queues.

Now you can simply apply for a personal loan online at the convenience of your computer, laptop, mobile or through an app on your mobile. You can also upload the soft copies of documents online to validate the information provided. At SMFG India Credit, we also offer doorstep documentation services, where a representative will meet you at a convenient, predetermined time and location to check the documents, click images of the documents or even make photocopies of them as required.

The process for personal loans is becoming increasingly streamlined, simple and straightforward. If at any time during the process, you face any issues or have any queries, you can always call the lender at their customer care center. A representative will be happy to respond to your queries and assist you in the completion of the loan application form.

At SMFG India Credit, we care about our customers and respect your requirements. Thus, no matter how small or big your query is, you can always reach out to us at our customer care center. Our team will gladly respond to your queries and will ensure that you complete the process efficiently and effectively. Normally, assuming you have all the documents required, the application for personal loans can be completed and filled within a mere 30 minutes*.

3. Quick Disbursal of Funds

At SMFG India Credit, we understand your urgency for the funds required to meet financial obligations and/or capitalize on accidental, serendipitous financial opportunities. We understand the indelible stain on reputation or goodwill to meet financial obligations on time or the cost of missed opportunities while painstakingly waiting for funds. Hence, our process ensures that the funds are disbursed to your account within 30 minutes* of verification and loan approval.

You can start by checking your eligibility of loan approval and possible EMIs with the assistance of the personal loan eligibility calculator.

4. Customized Plans

Instant personal loans are versatile and can be customized for a host of needs like home renovation, travel, wedding and medical emergencies. Personal loans can be customized in terms of interest rates, repayment schedules and tenures based on the specific needs and paying capacity of the borrower.

Many lenders, including SMFG India Credit,  have clear, demarcated product offerings like Home Renovation loan, Wedding loan, Medical Emergencies loans, etc. designed exclusively for the concerned need, after taking into consideration the unique role and purpose of the funds in fulfilling the particular need. Also, loans are provided at various interest rates based on the quantum of the loan, tenure and extensive assessment of the borrower’s credit history.

Personal loans have flexible tenures and repayment schedules that the borrower can pick and choose from.” One size fits all” rule doesn’t apply to personal loans. Here the loan caters to fulfill every dream, every need and every objective customized just for you.

Must Read: Personal Loan for Low CIBIL Score

5. Collateral Not Required

In most cases, personal loans are unsecured loans. Hence, there is no requirement to post any collateral as security in the event of default or non-payment of dues. Hence, this feature makes personal loans accessible to anyone who is currently employed and has a sound credit history.

Hence, one can see the obvious personal loan benefits as it is the surefire way to meet any financial need or objective. There is a personal loan for every need, desire, wish, objective and dream. The important task is to undertake careful investigation and extensive research to select the personal loan most suited to you.

How do personal loans work?

Personal loans are a type of unsecured loan that allows individuals to borrow a lump sum of money from a lending institution for various personal purposes. These loans typically have fixed interest rates and monthly installment payments over a specified term, often ranging from one to seven years. 

The approval and terms depend on factors like credit history, income, and the lender's policies. Borrowers repay the loan with interest in regular installments until the debt is fully paid off. Personal loans are versatile and can be used for consolidating debt, home improvements, medical expenses, or any legitimate personal financial need.

Things to Keep in Mind When Going for a Personal Loan

When seeking a personal loan, careful consideration is vital. First, assess your needs and maintain a good credit score to secure favorable terms. Understand lender eligibility criteria and be aware of additional costs like fees. Review the repayment plan thoroughly, ensuring it suits your budget. Additionally, it's wise to build or replenish an emergency fund and seek professional advice when uncertain. By following these steps, you can make informed decisions and choose a personal loan that aligns with your financial goals while minimizing risks.

Is There a Tax Benefit on Personal Loan?

In India, personal loans typically do not offer direct tax benefits. However, specific scenarios exist where tax benefits can be claimed based on the loan's purpose. If a personal loan is used for home renovation, you can claim deductions of up to INR 30,000 annually under Section 24(b) of the Income Tax Act. For home purchase or construction, interest paid on the loan is deductible up to INR 2,00,000 if the house is self-occupied; if rented out, the entire interest amount qualifies. Education loan interest is eligible for deductions under Section 80E, and if the loan funds business endeavors, interest may be claimed as a business expense under Section 37.

CIBIL score required for a personal loan

The CIBIL score required for a Personal Loan is crucial in determining loan approval and terms. Credit Bureaus India like CIBIL assign scores ranging from 300 to 900. A high CIBIL score increases approval chances, whether for personal loans or other types. High-score individuals can secure larger amounts at lower interest rates.

However, a score below 750 can reduce approval odds, potentially resulting in higher interest rates or lower loan amounts. Scores under 600 need scrutiny, and reasons for the low score, such as late payments, missed EMIs, or excessive credit card usage, should be addressed to improve loan prospects.

Reasons for Availing of Personal Loans

Personal loans are a flexible financial resource that can be used for a multitude of purposes. They come in handy for addressing various urgent financial needs such as funding weddings, covering unexpected medical expenses, ensuring timely rent payments, managing school or college tuition fees, enabling travel and shopping sprees, financing home renovation projects, and making down payments for vehicles.

What makes personal loans particularly attractive is their accessibility and quick approval process. They offer borrowers the financial freedom to address their immediate financial concerns without the need for collateral.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

FAQs

What is the basic criteria for a personal loan?

The basic criteria for a personal loan typically include an age between 21-60 years, being a salaried or self-employed individual, having a minimum monthly salary ranging from INR 20,000 to INR 25,000, and maintaining a credit score of 750 or higher.

How many types are there in personal loan?

Personal loans come in various types, catering to different needs such as personal loans for salaried individuals, self-employed individuals, weddings, women-specific loans, travel expenses, higher education funding, shopping, and debt consolidation.

What is the personal loan benefit of a salary account?

The personal loan benefit of having a salary account is that it provides the flexibility to fund various needs, including a child's wedding, higher education, vacations, or hobbies. It allows individuals to access financial assistance conveniently.

What are the benefits of financing your wedding through a personal loan?

Financing your wedding through a personal loan offers benefits like instant online approval, quick disbursal within 30 minutes*, and the option to borrow loan amounts up to INR 25 lakhs, ensuring that you can have the dream wedding you desire.

How can I get an income tax benefit from a personal loan?

Personal loans do not provide income tax benefits. Since the loan amount isn't considered part of your salary structure or monthly income, it cannot be used for income tax deductions. However, loans from family members or relatives may be considered part of your income and could be subject to taxation.

What are the benefits of using a personal loan to build a credit history?

Using a personal loan to build a credit history offers the advantage of obtaining credit at a lower interest rate, which can help you pay off existing debts and improve your credit score over time, reducing your overall financial burden.

What are the benefits of taking out an EMI-free personal loan?

EMI-free personal loans offer benefits like instant approval and disbursal, flexible repayment options, and minimal documentation requirements, making them a convenient choice for those in need of quick financing without the burden of regular EMIs.

Will I get a tax benefit on a personal loan if taken to buy a plot of land?

If you take a personal loan to purchase a plot of land, you may be eligible for a tax benefit under Section 80C of the Income Tax Act. This section allows you to claim a deduction on the principal repayment component of the plot loan, with a maximum limit of INR 150,000 per annum.

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