The unsecured nature of personal loans leads lenders towards adopting a much more cautious approach while evaluating personal loan applications. Several factors are considered by lenders while evaluating personal loan applications, chief among them being the applicant’s credit score, monthly income, monthly loan repayment obligations, employer’s profile, and job stability. Applicants failing to qualify for the set eligibility criterion can face rejection of their personal loan application.
Quick disbursal of funds
One of the prime benefits of personal loans has been their quick disbursal of funds, making them a suitable credit option for those in need of money for urgent requirements like a medical emergency or even a planned expenditure like home renovation. Personal loans like Axis bank personal loan are usually disbursed within a few days, with some lenders even claiming to disburse near instantly in case of online personal loans.
No collateral requirement
Being unsecured in nature, personal loans like Bajaj finance personal loan do not tend to
involve any requirement of collateral or security against the borrowed amount. This acts as one of the key benefits of personal loans and also facilitates quick disbursal of funds.
Minimal Documentation
With just basic documentation requirements such as income and identity proofs, personal loans can provide a smooth and hassle-free process to the borrower. Post verification of the required documents and credit profile check of applicant, disbursals don’t take up much time and are done within a few days. Make sure you are ready with adequate documentation when applying for a personal loan like Axis bank personal loan.
No restriction on end usage of funds
Another key benefit of personal loans like Bajaj finance personal loan is the absence of restriction on end usage of funds obtained from loan proceeds. Personal loans do not come with any restriction on end usage, except for speculative purposes. The borrower can use the funds for various purposes like wedding expenses, medical emergencies, home renovation, business expansion, holidays abroad, etc.
A wide choice amongst lenders
With numerous banks like Axis bank personal loan and Bajaj finance personal loan, fintech, NBFCs, etc., offering personal loans and their interest rates ranging widely, make sure to compare the offers of maximum lenders possible before zeroing in on any. While comparing the various options, do not restrict your comparison to just the lender’s interest rates. Ensure to compare other loan features such as tenure, processing fees, loan amount, prepayment charges, etc., before selecting any lender.
Go through various lenders’ personal loan features, rates offered to you for being an existing customer, and also have a look at their online financial tools like SBI personal loan calculator for convenience in knowing the expected EMI as per loan amount tenure and rate. Post this, compare their offer with other lenders, and finalize the lender whose offer matches best with your eligibility and requirement as per your credit profile and repayment capacity.
Availability of EMI calculator tool to check affordability
Prospective applicants can check their EMI affordability through an online EMI calculator available from Bajaj finance personal loan. Do not forget to factor in your existing monthly contributions towards earmarked financial goals when choosing your loan repayment tenure. When thinking of choosing an aggressive repayment involving short tenure to reduce your overall interest cost, remember that such action should be as a result of compromising on contributions towards other financial goals like a child’s higher education, retirement planning, etc. Doing so may force you to avail of costlier loans to adequately deal with unforeseen financial exigencies and/or achieve earmarked important financial goals of life.
Pre-approved loan offers for those eligible
Gradually, some lenders like Axis bank personal loan have been extending pre-approved personal loan offers and instant approvals to eligible consumers. This facility is offered to those consumers whose credit profile and income eligibility are sufficient enough to be given a pre-approved personal loan offer once the lenders have taken the necessary measures towards the same before offering it.
Presence of alternative loan options with zero restriction on end usage of funds
Never commit the mistake of ignoring various available alternative loan options before zeroing in on any. When in urgent need of funds, compare the alternative loan options like gold loans, top-up home loans, loans against securities, loans against property, etc., before finalizing or going ahead with personal loans. All such loan options, just like personal loans, do not involve any end-usage restrictions on loan proceeds, and even some of these generally come with both lower interest rates and longer tenure. In case you finalize to go ahead with a personal loan option, ensure to check your EMI affordability beforehand through online tools such as SBI personal loan calculator.
Cons
Relatively higher interest rates vis-a-vis secured loans
When compared to other loan options, especially secured ones like a gold loan, top-up home loan, etc., personal loans (being unsecured in nature) like Bajaj finance personal loan interest rates may be relatively higher. This is due to the involvement of high credit risk for the lender as there is no collateral or security pledged. Hence lenders tend to cover their risk by charging slightly higher rates. However, those with a good credit profile tend to get relatively lower interest rates than those with a history of indisciplined repayment of loans and credit card bills.
Fewer chances of loan for low credit score applicants
The credit score of the applicant plays a key role in loan approval and even fetching better interest rates and service terms. Possessing a credit score of usually 750 and above is concerned to fetch higher chances of personal loan approval. This is because such applicants are considered to be credit disciplined towards loan and credit card repayments, and hence, involve relatively lower credit risk for lenders. Some lenders like Axis bank personal loan may offer preferential interest rates to applicants having a good credit score. On the flip side, those having a low credit score may either have their loan rejected or get it approved by lenders at a higher interest rate.
Hence, before applying for loans like Bajaj finance personal loan, check your credit score and follow healthy credit practices like timely repayment of EMIs and credit card bills, restricting credit utilization ratio within 30%, periodically reviewing credit reports, monitoring guaranteed or co-signed loan accounts and avoiding multiple credit card applications or loans within a short span, to maintain a good credit score.
