A personal loan is a preferred choice for many individuals looking for a quick financing solution. Being an unsecured loan that does not need any collateral, a personal loan can be used well in case of unplanned expenses.
The nature of unplanned expenses is such that they can take a toll on your emergency funds and also put a lot of strain on your financial situation. As a result, it may be better to take care of these unplanned expenses with an affordable personal loan.
We are going to cover the basics of a personal loan, why you should opt for one, the kind of unplanned expenses it can cover, and how you can make a personal loan affordable.
What is a personal loan?
A personal loan is an unsecured loan that can be utilized for any personal or professional financial requirements. There is no particular limitation on which the loan amount can be utilized. For instance, Poonawalla Fincorp offers personal loans of up to Rs. 30 lakh at an attractive interest rate starting at 9.99%. Know more about Poonawalla Fincorp’s Personal Loans.
You can take a loan amount as per your requirement and use it towards your personal and professional goals.
Why opt for a personal loan in case of unplanned expenses?
A personal loan is one of the most popular loan types among consumers. These are the key reasons why you should opt for a personal loan in case of unplanned expenses:
- Quick & easy processing: Personal loans do not need much time for processing. The process can be completed quickly with easy documentation.
- Fast approval: The time for approval of a personal loan is not much. As a result, it is always better to opt for a personal loan when you are looking for quick funds for any unplanned expense.
- Affordable interest rate: Personal loans can be availed at attractive interest rates. The interest rates at Poonawalla Fincorp for personal loans start at 9.99% per annum.
- Higher loan amount: You can get a personal loan of up to Rs. 30 lakh to fund your unplanned expenses. The higher loan amount helps in meeting a variety of requirements.
- No collateral required: You do not need any collateral for taking a personal loan. This is one of the primary reasons why customers prefer personal loans against any other categories of loans.
- Online process: Many lenders offer online applications and approval of the personal loan process which makes it a hassle-free experience for the customer. Poonawalla Fincorp offers a 100% online application and approval process for customers.
Unplanned expenses that can be covered by a personal loan
There are a variety of unplanned expenses that can be covered by a personal loan. Some of the unplanned expenses that can be covered with the help of a personal loan are as follows:
How to make personal loans affordable?
One common myth is that a personal loan attracts a very high interest rate and can burn a hole in your pocket over some time. It is important to note that you can make a personal loan affordable by taking the right steps. You can make personal loans affordable by taking the following steps:
1. Include all income sources
It is important to disclose all your income sources to the lender. As a personal loan is an unsecured collateral-free loan, the lender has to assess the repayment capability of the customer by taking into account elements like income, job history, etc. These help in providing an assessment to the lender about the financial situation of the customer.
Inclusion of all income sources in addition to the regular salary or business income helps in giving more confidence to the lender about the repayment capability of the customer. Additional income sources like income from a side business, rental income, etc help in building a more robust profile for the customer.
As the rate of interest that the lender will charge also depends on the overall financial situation of the customer, by adding all income sources, you can secure a personal loan at a more affordable interest rate.
The idea here is that you have enough income and sources of income to pay back the personal loan that you are taking from the lender. If the lender is confident that you have a strong profile and would be able to return the money easily, it will be more than happy to extend you a personal loan at an affordable rate.
2. Maintain a good credit score
It is important to have a good credit score to get a personal loan at a lower rate. A credit score reflects your credit profile by way of a three-digit numeric number that can range from 300 to 900. A score above 750 is good enough to get you a personal loan at a competitive rate from a reputed lender.
You need to maintain a good credit score as it helps in getting a personal loan at competitive rates from a lender. The higher the score, the better are your chances of getting a loan at a low-interest rate from a lender.
The lender gets more confidence about your repayment capacity ifthe CIBIL score is in the higher spectrum. Maintaining a good credit score helps in getting a better deal from the lender.
3. Include a co-borrower
It is always better to rope in a co-applicant or a co-borrower on your loan application. By adding a co-borrower, you are not only able to add to the overall eligibility, but you can also get a good deal at a better interest rate.
It is always better if the lender allows you to add a co-borrower to your loan application. If that is a yes, you should always opt for a co-applicant on your application.
A co-applicant to your loan application can be a family member or a friend. By a co-applicant that also has a strong credit record, a lender's confidence is increased and you can get the loan approved at better terms and interest rates.
The primary objective of adding a co-applicant in a personal loan is to increase the probability of repayment of the loan. The co-applicant provides a further guarantee of repayment in case the borrower defaults on the loan because of any reason.
For a borrower, the good part is that the final loan amount is ascertained after taking into account the income of the main applicant and the co-applicant. Also, you may be able to secure a loan at a better rate with a co-applicant added to the application.
4. Opt for the right lender
A personal loan is offered by several banks ad NBFCs and you can get confused by the several names in the industry. It is important to be clear about what you are looking for as you finalize the lender. The interest rate being charged is one key metric on which you can select the lender.
It is equally important to consider factors like service, delivery, other charges, etc to finalize a lender. For instance, we at Poonawalla Fincorp offer end-to-end doorstep service with no hidden charges and no pre-payment/foreclosure charges. These are some of the offerings that make us one of the most preferred financial services brands in the country. Know more about Poonawalla Fincorp’s Personal Loans.
You need to opt for a lender that not only offers attractive interest rates but also does not add to the cost of a personal loan by either providing poor service or levying additional charges.
All these measures help in making the experience of taking a personal loan for an unplanned expenditure more affordable.
5. Opt for part-payments
A personal loan is expected to be paid off in EMIs with interest to the lender.It is important to try and make part-payments as and when you have surplus funds. By making regular part payments, you would be able to get your principal down over a period and reduce your overall interest outgo on the personal loan.
You can also opt for making a regular payment over the EMI amount as per the terms of your loan and make the overall experience affordable for you. Part payments are very important in reducing your interest component on the loan.
As a personal loan runs for a few years, with the increase in income, you can opt for making regular part payments and reduce your financial burden even for a personal loan that was taken for an unplanned expense.
6. Keep a strong track record
It is very important to maintain a strong track record and pay all EMIs on time. Any gaps in payment of EMIs may not only attract charges from the lender which will increase your expenses further but also impact your credit score. Therefore, it is important to keep a strong payment record with the lender and continue to pay the outstanding EMIs on time.
These are some ways by which you can manage your unplanned expenses with help of affordable personal loans. As mentioned, Poonawalla Fincorp offers personal loans at competitive interest rates and best-in-class service. You can take our word for speedy approvals, zero hidden charges, doorstep service, and flexible repayment plans among other good things that will make it an experience to remember. Click to know more about Poonawalla Fincorp Personal Loans.
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