Need Urgent Cash? You Could Consider Taking a Small Personal Loan

However, there is another course of action available to you in case you need urgent cash for whatever reason. This involves availing a small personal loan. You can even use a personal loan calculator to understand how the repayment works and the amount you will have to pay as EMIs for your loan.

What is a Small Personal Loan

A small personal loan is a kind of unsecured borrowing that you can use for various personal purposes. Typically, the maximum amount you can borrow through a small personal loan is around ₹2 Lakhs. Some banks and financial institutions may offer small personal loans up to ₹5 Lakhs or so as well.

Like all personal loans, this kind of borrowing is also unsecured, meaning that you do not need to offer any collateral to the lender. You can then use the amount borrowed to meet your emergency financial requirements.

Thereafter, over the course of the repayment tenure, you will have to repay the loan amount along with the interest thereon. These EMIs can be easily computed using a personal loan calculator, which is a free online tool that shows you the amount you will have to repay each month. All you need to do is enter some basic details such as the following:

• The amount of loan taken
• The rate of interest on the personal loan
• The repayment tenure

Once you fill in these details, the personal loan calculator will display the amount of EMI you need to pay the lender during the repayment tenure. This will help you plan your finances accordingly.

Benefits of Availing a Small Personal Loan

There are many advantages that you can enjoy when you avail a small personal loan for emergency financial requirements. Check out the top benefits of this kind of debt below.

●No Collateral Needed

Since a personal loan is an unsecured loan, you need not offer any asset as collateral. So, you can avail a loan even if you have no asset in your name, such as a home, a vehicle or any jewellery. This makes a personal loan suitable for all kinds of borrowers, particularly in case of any emergency financial need. If you want to pay for any urgent medical treatment or any other unexpected expense, you can avail a personal loan without worrying about offering any collateral.

●Easy Approval

Since a personal loan is an unsecured borrowing, it is also extremely easy to apply for this line of credit and get an approval from the lender. As long as you meet the eligibility criteria set by the bank or financial institution, and if your credit score is high, you will generally have no trouble getting an approval for your small personal loan application. These days, there are many lenders that even offer instant small personal loans, so you can get the amount disbursed to you without any delay.

●Minimal Documentation

You need not worry about any cumbersome paperwork because the documents required for personal loans are also fairly minimal. Typically, you will only be required to submit the following paperwork:

• Proof of identity (such as a copy of your PAN, passport, voter ID card, driving licence or Aadhaar card)
• Proof of address (such as a copy of your passport, voter ID card, driving licence or Aadhaar card)
• Bank statement for the previous 3 to 6 months
• Latest salary slips or income tax returns

There are typically the main documents required for personal loans. Once you have them ready, you can easily apply for a small personal loan.

●Improvement in Credit Score

Your personal loan can also help you build good credit history and improve your credit score. However, keep in mind that this is the case only if you pay your EMIs promptly as per the repayment schedule. If you do this, your credit score will see a boost and it will be easier for you to obtain other credit facilities later if you need them. But if you delay your EMI payments or fail to make them altogether, your credit score will fall.

This is why you need to ensure that you are capable of handling your EMIs. A personal loan calculator can help you plan your repayment as per your financial situation. Make use of this online tool to determine if you have the capacity to pay the EMIs for the loan you plan to avail.

●Versatile End Uses

Another advantage of small personal loans is that you can use the funds borrowed to meet various kinds of expenses. Here are the various end uses that a personal loan helps you handle.

• Emergency medical costs
• Wedding expenses
• Travel costs
• A premium purchase
• A major home, car or bike repair

See how one borrowing can be used for such diverse needs? This is why a small personal loan is a suitable financing option for you if you have any sudden cash requirements.

Conclusion

Now that you know what a small personal loan is and what its benefits are, you will be better equipped to make a decision about whether or not to avail this kind of a borrowing. If you do decide to take out a personal loan, make sure you use a personal loan calculator before applying for the loan. This way, you can plan the borrowing more prudently and only borrow what you have the ability to repay. If the EMIs are within your budget, you can keep your credit history and your credit score in the green zone, while simultaneously meeting your urgent financial needs as well.