What are the benefits of raising a personal loan over other financing options?

Are you short of funds and exploring different ways of raising money? There are multiple ways to do so such as personal loan, instant loan, credit card loan and loan against an asset such as gold or securities. Each of these sources have their own set of advantages and disadvantages.

For instance, when you withdraw cash via a credit card, the interest rate is exorbitantly high. When you give an asset as a collateral, for instance, gold or securities -- then you typically procure a loan at a lower rate of interest. But you may risk losing your asset if you fail to repay the loan on time.

There is another feasible option of raising money which is pre-approved instant loan. Generally, pre-approved instant loans also charge a higher rate of interest. Therefore, personal loan is a better option to raise than most other sources of raising fund.

Benefits of raising personal loan over other financing options:

1. Unsecured loan: Personal loan is an unsecured form of loan and therefore, you don't need any asset as collateral. Unlike other options where loan is offered at concessional rate of interest, borrower has to give his asset as security to the lender.

2. Instant options available: Thanks to technology, one can raise a personal loan instantly. It is now feasible to borrow money within a few hours by submitting a range of documents which include salary slips, PAN, Aadhaar and ID card of your company.

3. For a range of purposes: Personal loan is offered for a slew of purposes which include marriage, buying luxury item, renovation at home and for a  vacation.

4. Fixed rate of interest: The rate of interest charged on personal loan is determined beforehand. As a result, you can compute your EMI well in advance with the help of a personal loan EMI calculator by entering your interest rate and loan duration.

5. Array of options: There are numerous options of raising personal loan. One can raise a loan from a bank, NBFC or even a fintech platform.

However, it is vital to remember that personal loan charges a higher interest rate than most other funding mechanisms. So, one should exercise caution before jumping the gun.