As banks and NBFCs pass on the benefits of the Reserve Bank of India's rate cuts to consumers, it is the ideal time to take a personal loan and managing your financial needs.
Ravi was a young marketing professional, employed with an FMCG company in Mumbai. He was at work one day when he got an urgent call from the hospital. His mother had suffered a massive heart attack and had been admitted.
Ravi rushed to the hospital and found that his mother was stable but still critical. The doctors informed him that they would need to perform surgery to remove a blockage in her artery. Ravi wanted the best medical care for his mother, but with no insurance or extra cash in hand, he was in a fix. He approached his school friend Rohan, a management consultant, for money.
Ravi: Rohan, my mother has had a heart attack. She has been admitted to the hospital and is critical. She needs to undergo surgery, but I don’t have enough money to cover the expenses. Can I please borrow Rs3 lakh? I’ll return it to you as soon as I can.
Rohan: Oh! I really hope she gets better, Ravi. I’m sorry but I don’t have money to lend you right now. Why don’t you try taking a personal loan?
Ravi: A loan? I don’t have time to wait for the approval process. I need the money urgently; the doctors need to operate in the coming days. I don’t know how expensive the interest on the loan will get. I’m not sure if I can afford that.
Rohan: No! Not at all. I was just reading about it. After demonetization, banks have reduced their interest rates. You don’t have to worry about it becoming too expensive. And a friend of mine recently got his loan approved in just a matter of hours! Why don’t you see your options? You may even have a pre-approved loan available.
This marked Ravi’s entry into the world of personal loans. On conducting some basic research, he discovered he was eligible for a personal loan worth Rs.5 lakh. Ravi got the money to cover not just the surgery but also the cost of hospitalisation and medicines.
Maybe you know a Ravi. Or maybe, you find yourself in a similar situation. With interest rates falling, now is a great time to consider a personal loan to meet your urgent financial need.
Make your money work for you
With lakhs of people depositing cash in banks post demonetization, the Reserve Bank of India’s (RBI) interest cuts are finally being passed on to customers. In fact, banks and lenders began the year by announcing large-scale rate cuts. As a result, you can take a personal loan at interest rates that are at a six-year low.
This means you can get more from your loan in this low-interest rate environment – as this can help your monthly loan EMIs come down. This can in turn leave a lot more room for you to put your money to work. Not just that, you can even consider fulfilling all those dreams and projects that you have had to put on hold for lack of funds.
For example, if you have been putting away that month-long trip to Australia and New Zealand for the sheer budget, it’s time to start planning. You can simply rely on the personal loan, that’s now available for cheap. This could even apply to new projects and expansions like Ravi did.
Times have changed, and for the better.
That said, you need to act now to take advantage of these low rates. How? By switching to a personal loan and not relying on other sources of finance.
While financial experts are likely to advise you the same thing — ensure your borrowings are from professional sources in the financial industry, there are several benefits of getting a personal loan – and they seem to be getting better with time. Here’s a look:
-Procure it easily
Personal loans usually involve minimal documentation. You do not have to worry about the scores of documents and proofs of collateral. In fact, you can even apply for a personal loan and get approval almost instantaneously if you choose to get it online. Or like Ravi the photographer, you may even have a pre-approved offer waiting for you.
In fact, getting a personal loan is so simple that it only involves five simple steps. Check it in this easy-to-understand graphic here.
You can also find the list of documents required here
—Fewer rejection worries
Personal loans have the lowest rejection rate in the industry. This is a major advantage if you need funds urgently. And this is despite having low CIBIL scores or a prior history of payment defaults. You can still qualify for a personal loan. It’s that easy.
—Flexible payment options
Gone are the days when a relative seemed more approachable to sort loan repayment problems than the bank/NBFC. Today, you have a whole host of options available to make your repayment flexible. You can even foreclose your loan in advance like a home loan or any other retail loan.
—Great interest rates
In the current environment of falling interest rates, you need to keep updating your knowledge about the interest rates being offered. Banks and Non-Banking Financial Companies (NBFCs) like Bajaj Finserv will be transparent about the rates being offered.
This may not be the case with non-professional sources. They will always have a leverage over you. You will not be able to bargain for the interest rates. The rates could even go as high as 30%.
So, you can take advantage of the low rates offered by lenders and easily switch over to organised retail loans at interest rates below 12%. For instance, Bajaj Finserv is offering personal loans up to Rs25 lakh at 11.99% interest.
Like home loans, you can get tax benefits on a personal loan too. Remember, a personal loan is not considered income. So, keep this in mind while filing your income tax returns. The loan amount will not form a part of your taxable income. And you can claim additional tax benefits by showing that you used the loan amount for valid expenses.
The bottom line
As the cost of borrowing has come down significantly, it is a good time to seek a personal loan. Don’t let the fear of debt keep you from meeting your financial goals. Take advantage of the prevailing market conditions today.