Personal Loan? Not always bad!
When we are talking to our customers to resolve their issues about their Cibil credit score, we notice that there is a lot of misconception about personal loans. When used well, it can actually resolve a lot of issues including a financial crunch. Hence, we decided to put the facts together to educate about personal loan.
Following are the ways in which a personal loan can be beneficial:
Save money: Before you jump to conclusion that it does not help in saving money, let me first clear the air. In some cases it does help. If you are badly in need of funds and considering a credit card withdrawal or looking to swipe your credit card and is doubtful about being able to pay up the entire amount in the coming billing cycle, check with your bank if you are eligible for a personal loan Some banks have pre-approved personal loans for good customers which makes the loan processing quicker. Credit cards and personal loans are both unsecured loans and comparatively easy to avail - however personal loans are way cheaper. You will pay atleast 36 per cent on your credit card as compared to 14-16 per cent on a personal loan. Also, Indian economy is witnessing risk-based lending. To put it in simple words, if you have a higher Cibil credit score, you stand a chance to get loans at a lower interest rate and stand a better chance to negotiate better credit terms and conditions. Many banks and credit institutions offer added benefits like waiver in processing fee and speedier access to credit for consumers with a Cibil score above 750 (ranges between 300-900).
Break the debt cycle: Have you ever paid the minimum amount due on your credit card bill thinking that you will pay off the remaining amount next month entirely and find that you are still carrying the debt months after that? If you take a close look at your statements and calculate the amount you paid as interest on this amount and compare it with the amount you would have had to pay as interest on the personal loan, which can be availed by doing a balance transfer of your credit, the latter would have worked out cheaper. Credit card dues attract an interest rate of 36 - 48 per cent, where as if you do a balance transfer of your credit, which will be treated as a personal loan against credit card, you stand to get it at the rate of 18 per cent interest per annum - little more expensive then taking a fresh personal loan, still works out cheaper than. This repayment can be made in the form of EMIs, which is an added benefit. So, be a smart person, avail a balance transfer on your credit card to a personal loan to break high interest choking cycle and become debt free.
Boost your Cibil score: Your Cibil score is calculated on the basis of many factors such as regular bill payments, credit usage, number of enquiries, age and a good credit mix. We always advice our customers have a good mix of credit. So if you have only credit card and just because you take a personal loan, your score wont dip. In fact, if you take a personal loan and repay it on time, it will help you improve your Cibil score.
Also Read: Tips to get Your Personal Loans Approved
Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.
