Here’s the thing about emergencies; they come unannounced. They could arise due to a medical condition, an accident, unexpected car repairs, home repairs, unexpected travel, expenses, etc. Here’s another thing; unforeseen emergencies can happen to just about anyone. This can put stress on your savings and if you don’t have the ready capital available to meet expenses, you might be forced to borrow. However, it might not be easy to procure a high amount of credit from your friends and family on short notice. What would you do in such a situation?
The evolution of the BFSI sector in the last few years has ensured that there are several new instruments and institutions that serve the credit needs of a diverse population. Personal loans have gained popularity as being a hassle-free source of obtaining credit, particularly during emergencies. Let’s take a closer look at personal loans, and how they can help you during a cash crunch.
What is a personal loan?
A personal loan is an unsecured loan that can be taken from banks or financial institutions without pledging any collateral. These loans are usually granted instantly and can be used to meet any personal financial emergencies, without any preconditions. Instant personal loans can be used to meet unexpected expenses, refinance old loans, consolidate debt, make home renovations, travel, improve your credit score, etc. Unlike other secured loans, you can use the funds as per your flexibility and requirement. What’s more, some personal loans might even help in tax saving.
How personal loans can help you in a liquidity crisis?
Personal loans provide financial leverage that can extend beyond your monthly earnings and help you meet your unexpected expenses. Features like a simple borrowing process, zero collateral, as well as quick approvals and instant disbursals, make personal loans a viable solution for borrowers in need of urgent funds. Here are some of the reasons why personal loans serve as a great enabler during times of financial crises:
- Ease of access
One of the prime benefits of personal loans is the ease of access. Most lenders have a simple loan application process and can be usually undertaken digitally as well. For instance, at PaySense, you can simply get the PaySense mobile app and fill out the application form, submit KYC documents and sign the loan agreement – all within a few minutes. This is ideal for borrowers who are busy dealing with an emergency as they can apply for a home loan right from their home, without having to make multiple visits to banks, fill out lengthy application forms, etc.
- Instant loan approval
Once the application process for the personal loan is complete, the approval is granted instantly, provided that the eligibility conditions for the loan are met. Most banks and financial institutions process personal loan applications within a few working hours. At PaySense, all eligible loans applications are approved within 2-3 working hours.
- No stress of submitting collateral
Submitting an asset as collateral during the loan process can be challenging for most people. For personal loans, banks and other leading financial institutes do not require collateral for an unsecured personal loan. If you meet all the conditions, you will be granted the loan amount, with no conditions on how to use it.
- Tax benefits
Some applicants can also avail of certain tax benefits on a personal loan. Under Income Tax Act, if a user avails of a personal loan to renovate their home or make a down-payment for it, then they are eligible to claim tax deductions of up to Rs. 2 lakhs under Section 24(b) of the Income Tax Act. This is another way to save money on their investment, if you urgently need to undertake home repairs and renovations. Read more on how to save tax when taking personal home loans.
- Smart repayment plans
Recuperating from a financial setback or other disruption in life usually takes a long time, and repaying high EMIs for loans during this process can make it tougher to stand back on your feet. However, most financial institutions offers their customers the option to choose the most appropriate repayment plan as per their financial health, which can help them in balancing their budget better. These smart repayment plans make personal loans an attractive option for borrowers, as they offer great control over the repayment process. At PaySense, you can choose among several flexible payment plans using the PaySense EMI Calculator.
- No pre-existing terms or conditions
Unlike home or car loans, a personal loan doesn’t have any restrictions. You are free to use the funds any which way you please, which is extremely beneficial in times of crisis. For example, during medical emergencies, one needs to pay the hospital bills, purchase medicines, pay for transportation, or even on accommodation in a different city. The liberty to use the loan amount as per your own discretion is naturally a significant advantage.
- Competitive interest rates
Today, there are number of banks and NBFCs in the market offering unsecured personal loans has increased considerably, which has meant that customers can get a competitive rate of interest. With a plethora of choices available to borrowers, they can pick and choose from where they can get the best rate of interest as well as terms on their loan. Despite charging interest rates higher than secured loans, the rates for personal loans are usually lower as compared with credit cards. Credit card companies typically charge a high rate of interest on any loan and a personal loan at a lower interest rate can be a good substitute for credit card debt.
- High loan amounts available
Borrowers can get funds to the tune of several lakhs as personal loans from institutes and NBFCs without submitting any collateral. At PaySense, for instance, you can apply for a loan amount anywhere between Rs. 5000 to Rs. 5, 00, 000. The loan amount approved may depend on your repayment and credit history.
- Improve credit score
Another crucial benefit of personal loans is that they can help you improve your credit score. While your credit score might naturally not be a top concern during times of emergency, but the fact is that you need a decent credit score for getting loans in the future, and in some cases, even getting a job. Borrowing a personal loan and repaying it on time can help you improve your credit score and help you bounce back in the long run.
How to apply for a personal loan from PaySense
You can apply for a personal loan ranging from Rs. 5000 to Rs. 5, 00,000 from PaySense. Here are the conditions that make you eligible for an instant personal loan from PaySense:
- Your residence and citizenship should Indian
- Your age must be between 21 and 60 years (both years inclusive)
- You must reside in one of the 40+ cities where PaySense offers it service
- You must have be employed and have stable source of income (salaried or self-employed)
- Your minimum monthly income must be Rs. 12,000 (if you are salaried employee) or Rs. 15, 000 (if you are self-employed)
You will require the following documents while applying for a personal loan from PaySense:
- Any valid proof of identity (PAN or Aadhar Card)
- Any valid proof of address (Aadhar Card, Rental Agreement, Utility Bill or Postpaid Bill)
- Proof of income (Bank account statement of the last months)
- A photograph (or a selfie)
Follow these steps to get a short-term personal loan for PaySense:
- Get the PaySense mobile app.
- Create your profile by inputting all the required information.
- Choose a loan amount within your credit line, which is the maximum amount that you are eligible for.
- Select your repayment schedule using the PaySense EMI Calculator.
- Upload KYC documents (you are required to do this only the first time you apply for a loan).
- Review the loan agreement.
- Sign the agreement digitally and fill the NACH form.
- Check the status of your application using the PaySense mobile app. Approvals are granted within 2 working hours.
- Once your application is approved, wait for the loan amount to be credited to your account.
- Start paying the EMIs as per schedule.
- Close your loan by paying all EMIs on time.
Personal loans are thus, a great way to meet sudden high expenditures like a medical emergency, or a home renovation, or a car repair, etc. Personal loans ensure that you don’t end up using all your savings in a crisis and continue to meet your monthly financial obligations in the future without much difficulty as well. It is best to check the eligibility criteria as well as the interest rates on personal loans from multiple websites before making the final decision. Always read the loan agreement very carefully, and be sure of the terms and conditions before you sign it. If you have any questions or queries about personal loans, please write to us on support [at] gopaysense [dot] com.
Apply for Loans of upto ₹5 Lakhs easily using your phone or laptop, and pay back on low EMIs