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5 Reasons Why You Should Get a Personal Loan

Published on Apr 24, 2020Updated on May 6, 2024

5 Reasons Why You Should Get a Personal Loan

Personal loans are unsecured loans offered by financial institutions that help you to finance your requirements and deal with the uncertainties of life. Some of the best reasons for a personal loan involve expenses such as medical emergencies, education, marriage etc.

The number of persons applying for personal loans has increased sharply in the past decade. Between 2015 and 2018, unsecured loans have witnessed a growth of approximately four times. This growth is attributed to several reasons like lower interest rates, quicker and technology-based disbursements etc.

What are Personal Loans?

As unsecured loans, personal loans are those that do not require you to arrange for a collateral such as a car or property. As opposed to car or home loans which can only be used for a specific purpose, funds acquired from a personal loan can be used for a variety of reasons. The lack of collateral evaluation also means that the loan approval process can be fast, depending on how well you fit the eligibility criteria. The approval and interest rates will generally depend on your credit score, employment status, location, monthly income, along with lender-specific policies.

Reasons You Should Use a Personal Loan

Consolidating Debt

One of the best reasons to get a personal loan for debt consolidation. Managing multiple loans and credit card dues from several lenders can prove to be challenging. Missing payments can result in negatively impacting your credit score. Availing a personal loan in such a situation can save you from financial distress. All you require to do is consolidate different payments into one debt with the help of a loan. This method offers several benefits that include enjoying an overall lower rate of interest which can help in reducing the timeframe required to pay-off your loan. Follow these steps to make sure you can avail of a loan to consolidate your debts:

Finance Wedding Expenses

You can avail of the funds required to make your wedding a day to remember. The wedding loan can be used to fund any aspect of the wedding right from the dress, dining, photography etc. This will help in ensuring that your wedding expenses do not dent your savings.

All you require to do is fill-up the form and submit the documents required. You can opt for a tenure that best suits your requirements. The funds will be transferred to you within 24 hours of your loan getting approved.

Home Renovations

You can apply for a home loan in renovating your home space. This can help in improving the value of the home without purchasing a new one. Borrowing to renovate your home is an ideal option even for persons who intend to sell their home soon. However, home renovations or additions might be pricey or might exceed the limit on your credit card. A personal loan might be the right solution for your requirements. You can avail of a personal loan of approximately 90% of the cost of the renovations.

Dealing with Medical Expenses

The deteriorating quality of life due to lifestyle factors might result in people having to resort to medical procedures from time to time. Not all medical procedures are covered by insurance policies. Select insurance policies exclude certain diseases and treatments that you might require to undergo. Clauses in medical policies might even require you to pay a certain amount out of pocket. A personal loan for a medical emergency is one of the best solutions in such situations. The loan amount can be used to pay for all types of medical expenses and therapies that you might have to opt for.

Our streamlined procedures ensure that the money is credited to your account within less than 24 hours of loan approval, and at a high priority so that you get the funds you need at the earliest.

Urgent Personal Loan

Urgent personal loans can get you quick access to funds when you are dealing with unforeseen financial expenses. Reputable lenders usually offer urgent personal loans with features such as quick approval and minimal documentation. This enables you to acquire the funds you need speedily and without undue stress. Based on your eligibility, you can get lower interest rates and flexible loan tenures to make borrowing more manageable in the times of crisis.

Personal Loan for Higher Education

This type of loan is useful for either professionals wanting to advance their career prospects or parents wanting to ensure that their children get the highest quality education. A personal loan for higher education can be used not only to cover tuition fees but also for hostel/travel expenses, educational materials, and a computer/laptop. Unlike a traditional education loan, you can get a repayment tenure of up to 5 years or 60 months.

Travel & Vacation

A travel loan or a holiday loan will make your solo/family dream vacation possible without having to burn through your savings. The loan can cover everything from airfare and accommodation costs to tour packages and food expenses. Once everything is verified, you can get the loan amount within 30 minutes* of loan approval, letting you begin your journey sooner than later. Make your dream vacation a reality and spread out the cost over a repayment tenure ranging from 12 to 60 months.

How Do People Use Personal Loans?

Here are some situations where people opt for personal loans:

  • Wedding expenses such as venue deposits, catering, honeymoon etc.
  • Medical emergencies such as hospital bills, surgeries, etc.
  • Cover traveling costs to a long-awaited destination.
  • Launching or expanding their own small business.
  • Home renovation or home improvement/repairs.
  • Cover higher education expenses for either themselves or their children.
  • Debt consolidation, i.e., combining multiple high-interest debts into a single, potentially lower interest loan.

How Do Personal Loans Work?

Personal loans give approved borrowers a lump sum of money, which they pay back over a certain period of time with interest. Here is an overview of the entire process:

  • You will submit an offline or online application to the lender. It will typically include your personal and financial information such as your income, credit history, employment details, and the desired loan amount.
  • The lender will evaluate your application based on their eligibility criteria. It will generally include your credit score, age, employment status, monthly income, and location.
  • Depending on the evaluation, you and the lender will come to an agreement on the loan terms such as the amount, interest rate, and the repayment term.
  • Once everything is verified and the loan is approved, the amount will be disbursed to your account, which can be used for any purpose they need.
  • You will repay the loan in monthly installments over the predetermined period. The interest rate could be fixed or variable.
  • Once all the scheduled payments are done, the loan amount will be considered to be repaid in full and the loan account will be closed. Some lenders may levy prepayment/foreclosure charges if the loan is paid off before the end of the term.

What Are the Requirements to Get Approved for a Personal Loan?

The requirements to get approved for a personal loan may vary from lender to lender and the type of the loan. Here are the requirements you can expect at SMFG India Credit:

  • You must be a residing citizen of India.
  • Your credit score should be at least 750.

For Salaried Employees:

  • Your age must be at least 22 at the time of loan application and no more than 65 at the time of loan maturity.
  • Your monthly income should be at least INR 25,000 if you reside in Mumbai and Delhi. For other locations it should be at least INR 20,000.
  • You should have a minimum work experience of 1 year.
  • You should be an employee of the public sector undertaking or a private company.
  • Employment period with your current employer should be at least 6 months.

For Self-employed Individuals:

  • Your age must be at least 25 at the time of loan application and no more than 65 at the time of loan maturity.
  • Your minimum income is based on the minimum annual turnover and yearly profit after taxes, according to the nature of the profession or the domain of work.
  • Your business must have been in existence for at least 3 years.

* 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

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