Top Reasons Why Personal Loan Demand is Increasing
Most personal loans are short-term loans that don’t last longer than 60 months. You can choose how long the loan will last. Most lenders also have specific terms that make it easier to pay them off early.
If anyone is short on cash and going through tough times, they can instantly get a personal loan. The best thing about it is that you can use it for anything, unlike loans for cars or houses. These are the major reasons why, post-pandemic, most people are opting for personal loans.
Interest rates on loans can be as high as 35%. It is determined by the credit’s risk and other similar factors. Let us have a look at the top reasons why personal loans are in high demand.
What is a Personal Loan?
Personal loans are given to self-employed or salary-based people. These loans don’t need any security. A personal loan has a yearly interest rate between 11% and 28%. The money lender and credit score are important factors to consider when you apply for personal loan.
These loans have different lending terms ranging from 1 year to 5 years. The use of a personal loan is not restricted or predetermined. You can use it as per your legitimate needs.
Reasons for the Increase in Demand for Personal Loans
Usage as per requirement
Banks provide open-ended and closed-ended loans. It means closed funds are used only for the purpose it is taken. Open-ended loans can be used as per the user’s needs. Close-ended loans are car loans, home loans, study loans, etc.
A personal loan has no end-use limits. You can use the disbursed amount for any authentic purpose. This loan can be used for :
- Medical expenses: to pay medical bills
- College tuition fees: higher studies abroad or within the nation
- Marriage expenses: pre- and post-wedding expenses
- Repay multiple loans by merging all the debts and paying them
- For a vacation or to buy a gadget
Low Loan Interest Rate
Following the COVID-19 pandemic, the global economy has been badly affected. There’s no cash flow, and economic activity has dropped to zero. The good news here is that personal loan interest rates are lower than before.
Bankers are pushing to bring down the personal loan rate to attract applicants. It might be the best time to apply for personal loan to meet the immediate cash need.
Simple Application Process
It is very easy to apply for a personal loan. Due to the impact of the coronavirus, many users have started applying online. This trend has continued. It has lowered the use of paper and increased social distance. Banks are also supportive of applying for a personal loan online.
To apply, users must visit the lender’s website, fill out the loan form, and upload the required documents.
When you apply for a loan, you first check the disbursal time. The faster the disbursal, the higher the demand for that loan. The same is the case with personal loans. They are highly favored in times of emergency. Personal loans have a turnaround time of 24 hours. It is one of the main reasons for the increased demand for personal loans.
Hassle-free Payable EMIs
When applying for a personal loan, it is vital to know the payment format. The payback is usually done in equal monthly payments. These are decided before getting the loan. Nowadays, banks prefer monthly payments on a set date. One thing to pay attention to here is that EMIs should be pocket friendly. Otherwise, it will be a needless burden on the finances.
For instant personal loans, the main focus is laying out easily payable EMIs. The main reason for easy EMIs is the low interest rate. The lower the rate of interest, the lower the payable amount. It is considered very important, so personal loans are mostly in demand.
How Does a Personal Loan Help Pay Multi-Debt?
Multi-debt payment means that you have multiple debts to be paid. For this payment, the user applies for an instant personal loan and uses that amount to pay all their dues. They bring together all the debts and pay them back in equal monthly payments. This reduces the amount of EMIs and thus the burden.
In today’s scenario, one out of every hundred people is trapped in bad debt. In such urgent times, personal loans are helpful.
What is the Purpose of Applying for Personal Loans?
In recent years, Indians have opted for unsecured loans more than secured ones. Due to no collateral being required, borrowers opt for personal loans to cover many of their expenses. They also increase their discretionary expenditure on new cars, electronics, home decor, etc.
Despite the rise in interest rates, recent data shows fewer bad debts. Personal loan borrowers felt the pressure of high interest rates and opted for short-term loans from non-banking firms. Because of the low interest rates and quick processing, those in need of immediate funds are turning to quick cash loans. The banks’ use of various forms of financing has also contributed to this. The major factors for the rise in demand for personal loans are the rise in online borrowing, KYC updates, and technology updates in digital lending.
As per the data for the quarter starting in July 2022, there has been an upward shift in demand for personal loans. A growth of 18.8%, equal to Rs. 30 lakhs, has been noted by the end of July 2021.
The reasons above can attract any person to apply for a personal loan when needed. Personal loans are making it easier to fulfill many urgent needs.
Recent data shows that there has been a rise in users opting for personal loans. Moreover, any person who meets the basic eligibility criteria can go ahead and apply for such a loan. No other loan has such a hassle-free, easy, and quick process.
Moreover, there is no limit on the usage of the loan amount, which makes it preferable for users. Due to all these reasons, a personal loan has become one of the most popular loans, and its demand is growing daily.
For similar blogs on instant personal loans and other topics, visit Piramal Finance. You may also take a look at the products and services they offer.
Also Read: Does the Purpose of Personal Loans Matter for Loan Approval?
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