Personal loans are one of the quickest and easiest ways to procure a significant amount of funds without hassle. Whenever you require an extra bit of money, whether it is for emergency expenses like medical bills, an immediate purchase, or planned expenses like going on a foreign vacation, etc., a personal loan can really come in handy.
Over the past few years, the demand for personal loan has grown exponentially, and advantages like the ones mentioned above are one of the reasons for their immense popularity..
Let us further understand the reasons why personal loan demand is continually increasing year by year.
Personal Loans Do Not Require Collateral
All loans are broadly classified as secured or unsecured loans. In a secured loan, you need to have a valuable asset like gold or property that you have to keep as collateral with the lender for the duration of the loan tenure.
On the other hand, an unsecured loan is given without any collateral. A personal loan is a type of unsecured loan. Hence, you do not need to pledge a valuable asset to get such a loan. The lender evaluates your credit score and past loan repayment history in order to approve or reject your loan.
The unsecured nature of personal loans is one of the biggest reasons why they're so popular. Not everyone has a valuable asset to provide as collateral. Hence, they can go for a personal loan when they’re in need.
Personal Loans Have No End-Use Restrictions
We know that the funds from a home loan can only be used to purchase a home. The same is true for a car loan. The disbursed amount cannot be used for any purpose other than what the lender has given the loan for.
This is not the case for personal loans. A personal loan has no end-use restrictions, meaning the disbursed amount can be used for any expense that you decide, as long as it’s legal.
Some situations in which a personal loan can be used are:
To pay for urgent medical expenses
To pay college tuition fees
To pay for wedding expenses
To consolidate multiple debts and bring them under a single EMI
To plan a vacation or buy a gadget
The pandemic has significantly affected the global economy. Hence, economic activity has gone into a lull. The advantage of this is that personal loan interest rates are now lower than they were a couple of years before. Lenders are pushing low interest personal loans, and the current climate might be the best time for you to get a personal loan if you’re planning a major expense.
Simplified Online Loan Application Process
You can almost complete the entire application process of a personal loan online. Reduced social interactions due to the pandemic have also resulted in more lenders focusing on a paperless and entirely digital application process.
Simply visit the lender’s website, fill out the personal loan application form, upload digital copies of the documents, and you’re good to go.
Personal loans are some of the quickest loans to be disbursed. Hence, they’re popular during emergencies.
Pre-approved personal loans or instant personal loans are disbursed in as quick as 24 hours. This fast turnaround time is one of the reasons why personal loan demand is increasing.
When you borrow a personal loan, the EMI or Equated Monthly Instalment is one of the most important parameters that you give thorough consideration. This is because the EMI is how you repay your loan, and if the EMI amount is high, then you will have an unnecessary burden on your finances.
The major selling point of a personal loan is that the EMIs are affordable. This affordability is partly due to the low-interest rates and is also one of the reasons for their growing popularity. If you want to check how affordable your EMI will be, then use an online personal loan EMI calculator.
The above reasons have very practical ramifications, and any applicant looking for a personal loan would find all these advantages extremely helpful and convenient. No other loan has such a hassle-free, easy, and quick process.
On top of that, you can use the loan amount for whatever reason you wish. Due to all these reasons, the personal loan has become one of the most popular loans, and its demand is growing day by day.