India's Largest Lending Platform | Fibe (formerly EarlySalary

Is a personal loan a good or bad option to opt for? The simple answer is that it depends on your requirements. For instance, while it gives you the flexibility to use the funds without any restrictions, it can also come with higher interest rates. 

So, you must know all its pros and cons before applying. You also need to analyse your financial requirements, repayment capacity, and several other factors. Read on for answers to the question, “Is a personal loan a good idea?”, and for tips on choosing the best offer. 

Why Should You Choose a Personal Loan?

It is normal to wonder, “When is a personal loan a good idea?”. To help you understand, here are some reasons why personal loans are a good option: 

• Get Lump Sum Funds: It gives you immediate access to ample funds to make a sizable purchase as lenders deposit the loan amount in a lump sum
• No Collateral Required: This protects your valuable assets from any risk, as the lender can rightfully seize your assets if you default on EMIs of collateral-backed loans
• No End-Use Restrictions: It is a versatile loan that you can use to meet any financial requirements; no questions are asked by the lender
• Flexible Loan Tenure: You can choose a comfortable tenure option of up to 3 years or more as per your convenience, allowing you to ensure easy repayment 
• Helps Improve Credit Score: Paying your Loan EMI on time is a great way to gradually improve your creditworthiness and boost your eligibility for other types of credit 
• Affordable Rates: Compared to some credit options, personal loans have lower interest rates, so you can save more with this option
• Streamlined Repayment: Unlike credit cards, you don’t have to wait for a bill to know your monthly dues. The EMI amount remains the same throughout the term unless you have chosen a floating-rate variant

Also Read: Benefits of a Personal Loan

When Should You Not Apply for a Personal Loan?

These loans can be an ideal option when you want to access substantial funds immediately, without any restrictions and collateral requirements. That said, if your application gets rejected, it can hurt your credit score. 

So, here are tips on when to avoid opting for these loans: 

• If You Don’t Meet Eligibility Criteria: Your application will likely get rejected if you don’t meet all requirements 
• If You Have a Better Financing Alternative: In case you have an alternative option, such as a 0% interest credit card, in such case you can skip a personal loan 
• If You Have a Low Credit Score: If you have a score below 600, your application may get rejected or you may get funds at a higher rate  
• If You Can’t Afford to Pay Another EMI: Having a high debt-to-income ratio may lead to rejection, so ensure your ratio is under 30% before applying 

How to Get a Good Offer

With a better understanding of when to avail this option, here are some tips to get the best terms: 

• Improve your credit score before applying 
• Check if you meet the lender’s eligibility criteria 
• Apply only for the required loan amount and not in excess
• Compare the interest rates of multiple lenders to make a well-informed decision
• Check additional fees and charges, such as processing fees, prepayment charges, etc 
• Choose a longer tenure to get a lower EMI amount for easy repayment 
• Apply with an online lender to enjoy a hassle-free application process 
• Use an personal loan EMI calculator to plan your instalment amount and other loan terms
• Do a thorough research on the lender before applying 

Keeping the tips in mind, you can choose the best offer that helps meet your requirements without straining your budget. One such option is the Fibe Instant Cash Loan, which gives you access to up to ₹5 lacs loan at a rate of just 2% per month. 

You can choose a convenient repayment timeline ranging from 3 to 36 months and pay zero charges on prepayment. You can also apply online in just a few clicks, with minimal paperwork. Download the Instant Loan App or visit our website to get started! 

FAQs on When is a Personal Loan a Good Idea

Are personal loans high-risk?

Yes. These loans are not secured by collateral and so the rate is often higher. As such, missed payments can put your finances at risk, as the cost of the loan can skyrocket.  

Is it a good idea to take a personal loan?

To answer the question, “Is a personal loan a good option for me?”, you must evaluate your needs and the loan’s affordability. Generally, these loans are ideal when you want a lump sum amount without any restrictions and security requirements. 

What is the safest place to get a personal loan?

Registered financial institutions with positive customer reviews and a secure website can be a safe option to apply for a loan. Fibe has a PCI DSS App-based journey and ISO/IEC 27001 Certification, making it a safe digital lending option.

The digital personal loan is now an instrument you can access within seconds from your smartphone. Modern fintech solutions have made it so that you don’t need to worry about:

• Visiting physical branches 
• Applying manually for a loan 
• Submitting documents in person

Today, all you need is an offer from your preferred lender and you can get the funds you need in mere minutes. Read on to learn the digital lending meaning, its pros and things to consider before applying.

Understanding Digital Personal Loans

A digital personal loan, like regular loans, is a financing instrument that you can avail to meet your planned and unplanned needs. The main difference is that you don’t need to visit the bank to apply or manage it once approved. 

Here’s an overview of how these loans work:

• You choose a lender that accepts online applications for a personal loan
• You fill out the online application form and upload the required documents
• Wait for the lender to assess your application and verify your documents
• After the verification process, they approve or reject your application
• If approved, you will receive the funds in an account of your choosing

Do note that these online lenders evaluate your application based on your:

• Financial profile
• Credit report and credit score
• Income and employment
• Age and city of residence
• Existing credit accounts and credit history

Pros of a Digital Personal Loan

Here are the benefits of getting a digital personal loan:

1. Quick and Easy Application

You can apply for digital loans in just a few clicks on your laptop or your smartphone. This type of loan eliminates the need to make a trip to a lender’s branch. Moreover, you don’t need to ask for brochures to know the features and charges of the loans. This is because, in digital lending, this information is easily available on the lender’s website. 

Additionally, you can also manage your loan online, which includes:

• Checking the next due date for the EMI
• Knowing the repaid amount and the outstanding balance
• Making advance payments 
• Getting reminders regarding the due dates

2. Low or No Processing Fees

When availing any financing options, there are a few fees and charges, such as:

• Processing fees
• Late payment fees
• Foreclosure charges

Considering that these are digital loans, there are fewer overheads for the lenders to handle. As such, the costs are much lower. In fact, most institutions levy a nominal charge to process the loan. Some even offer loans with zero charges, enhancing the experience significantly. 

3. Instant Fund Disbursal

Another significant benefit of digital lending is that you get access to the sanctioned amount almost instantly. After you apply, lenders take little time to process and verify your application. As such, these instruments are ideal for almost any situation, even when you need funds urgently. 

4. Competitive Interest Rates

To make borrowing easier and more attractive, lenders offer various perks. These include lower interest rates as well. Since the overhead costs for these lenders are lower, they can offer loans at lower rates than regular loans. 

This is a notable advantage since interest charges can be quite substantial, making repayment a lot costlier. If not planned properly, you can also fall into a debt trap. However, with lower interest rates, such risks are lower as the EMI and total repayment are more manageable. 

Also Read: How to Get Instant Personal Loan of ₹50,000

Points to Consider Before Getting a Digital Personal Loan

While getting a digital personal loan, you must keep these points in mind:

• Choose a trustworthy lender to avoid fraud and protect your finances
• Assess your financial requirements thoroughly before deciding on the loan amount
• Check the eligibility criteria and documentation requirements beforehand to avoid rejections
• Choose the tenure smartly since it influences your digital personal loan EMI amount
• Opt for a lender that levies lower interest rates and other charges
• Read the terms and conditions associated with the loan carefully
• Check if the lending institution is authorised by the Reserve Bank of India (RBI)

Digital loans are an effective solution to meet all your time-sensitive needs and are easy to get. There are various lenders that you can choose from and one of them is Fibe. You can get an Instant Loan of up to ₹5 lakhs with minimal formalities and affordable rates.  

Download our Personal Loan App from the App Store or Google Play to get the funds you need with ease.

FAQs on Digital Personal Loans

How does a digital loan work?

These work similarly to regular loans. The main difference is that you don’t need to visit the lender’s branch to apply for and manage digital loans.

Is Digital loan safe?

Yes. However, choosing a trustworthy lender is the key to protecting your finances.

Due to the impact of inflation on the cost of living, it is often referred to as a silent financial predator. This is because it causes the value of money to shrink over time as costs gradually increase for various goods and services. Simply put, you get less for your money, effectively reducing your spending power. As such, inflation can and often does, affect your standard of living. 

Read on to know more about inflation’s impact on your finances and how to mitigate it.

What is Inflation?

Here’s a brief overview of what inflation is:

• It is the rise in prices of goods and services, which results in reduced purchasing power
• Inflation rates reflect the percentage at which the cost increases over a defined period of time 
• The Central Government calculates these rates based on the average price increase of a basket of selected goods and services
• The inverse of inflation is deflation, where the prices decline due to lower spending
• Too much deflation is bad for any economy as it can lead to larger issues like mass unemployment

How Inflation Impacts Personal Finances?

Here’s what you need to know about the effects of inflation: 

Reduced Purchasing Power

• The most notable impact of an increase in the price of goods and services is the declining purchasing power

• The higher the inflation, the lesser you can get with the same amount of money
• The standard of living shoots up as well, making it harder to maintain your lifestyle

Decreased Savings

• A high inflation rate also gradually erodes your savings, if it isn’t invested
• This is because many banks offer savings accounts and deposits with lower interest rates compared to the current inflation rates 
• Investments are the only way to combat inflation, especially if the ROI is comparatively higher 

Higher Borrowing Costs

• Due to the impact of inflation on interest rates, your cost of borrowing also changes 
• When inflation rates rise, the Central Bank generally responds by increasing the interest rates on loans to control supply 
• If you have opted for floating-rate loans, your interest rates will rise, leading to a considerable increase in interest payments

Negative Effect on Retirement Planning

• If not accounted for properly, inflation can also significantly reduce the real-world value of your retirement corpus
• Saving money without combating inflation can result in having savings that may not be enough to keep up with the cost of living 

Influence on Investments

• If you have invested in stocks and bonds, their returns may react differently due to inflationary markers
• However, their returns may still provide a hedge against price increases 
• It is essential to review your investments periodically against inflation rates to ensure that they outperform inflation 
• If need be, adjust your investments to align with the prevailing macroeconomic conditions and your financial goals

Also Read: Protecting Yourself from Financial Fraud

How to Mitigate the Impact of Inflation?

Follow these strategies to offset the effect of inflation on investment and other factors of your finances:

• Invest in Inflation-Protected Securities: Consider investing in an instrument that offers higher CAGR returns than the rate of inflation.
• Diversify Your Portfolio: By diversifying your investments across different asset classes, like stocks, mutual funds, fixed deposits and bonds, you can reduce inflation’s impact. 
• Invest in Commodities: Commodities, like gold, silver and crude oil, are considered a great hedge against price increases and economic uncertainties.
• Minimise Debt: It helps to reduce your debt outgo, as the cost of your credit may increase significantly during high inflationary periods.

When it comes to inflation, any amount of wealth appreciation can help you safeguard your money’s value. To truly combat it, start by allocating your primary income towards investment avenues with positive outlooks over longer horizons. 

In instances where your savings are at risk, Fibe has got you covered with an Instant Personal Loan of up to ₹5 lakhs. The funding comes with competitive rates and flexible tenures, making repayment affordable and adjustable per your needs. Download our instant Loan App or log in to our website to enjoy quick and hassle-free funding with minimal paperwork.

FAQs on How Inflation Affects Personal Finances

What is the impact of inflation on finances?

Here’s how inflation can affect your finances: 

• Suppose that you currently have ₹1 Lakh, which you plan to keep with you as cash
• Assuming that the inflation rate for the next year will be 6%, the value of your money will reduce by ₹1,00,000 X 0.06, i.e., ₹6,000
• This is because what you could buy with ₹1 Lakh would then cost ₹1.06 Lakhs

How does inflation affect personal finances?

Here is how inflation can erode a significant chunk of what you earn over time:

• Reduces your purchasing power
• Increases the cost of borrowing
• Diminishes the value of an accumulated, uninvested corpus

A professional loan and a personal loan are two of the most optimal ways to get an unsecured loan. If you want to start or expand your independent profession, then both options can help you arrange the funds. 

That said, both these options have unique features and requirements. Knowing them beforehand can help you make a well-informed decision. This way, you can choose one that simplifies access to funds without increasing your financial burden.  

Read on to know more about personal and professional loans, their features, how to choose between them and more. 

What is a Professional Loan? 

It is a loan that helps self-employed professionals meet the financial requirements of their occupation. This includes:

• Day-to-day expenses 
• Equipment purchase 
• Emergency funds
• Buying or renting a workspace 
• Firm expansion 
• Transport or delivery expenses 
• Hiring and training staff 

Here are some features of loans for professionals:

• It doesn’t require you to pledge any assets as collateral 
• You can choose any flexible repayment option
• You enjoy a tailored loan offer, suited to your profession 
• You can also use this loan to finance your education 

Also Read: Benefits of a Personal Loan

What is a Personal Loan?

This is also an unsecured loan offered by lenders and you can use it for your personal financial requirements. You can use this loan to:

• Cover the cost of emergency medical expenses
• Fund your travels
• Consolidate your debt
• Renovate your home 

The features of a personal loan are as follows:

• The amount depends on your creditworthiness, income and financial history
• It has a straightforward process, as you don’t need to pledge collateral
• You can apply with minimal documentation
• You can repay with a flexible tenure, which varies from lender to lender

How to Choose Between Them?

Following are some factors to consider when choosing between a professional and a personal loan. 

Eligibility

Eligibility criteria are one of the major factors to help you choose between these two loan types. Only doctors, lawyers, CAs, etc., are eligible to apply for a professional loan, but anyone can apply for a personal loan. Remember, all lenders have different eligibility criteria, which you must check before applying. 

Documents Required

While the majority of the documents are similar, there is one key difference. You must also provide additional proof of income and degree certificates for professional loans. Here are all the necessary documents to apply: 

For professional loans: 

• Aadhaar card, PAN card, voter ID, driving licence, or other KYC documents
• Address proof
• Proof of business, such as rent agreement and electricity Bill
• Bank account statement 
• Certificate of practice
• Highest professional degree or certificate 

For personal loans:

• Aadhaar card, passport, voter ID or other identity proof
• Address proof such as an Aadhaar card, rental agreement, or utility bills
• Last 3 months’ bank statement 

End-use Restrictions 

One way a personal loan wins over a professional loan is that you can use it for any purpose. However, if you apply for professional loans, you can’t use the funds for personal expenses. On the contrary, you can use personal loans for your private and career-related requirements.

Loan Amount

The maximum amount you can get depends on many factors. These include your chosen lender’s policy and eligibility. One way to decide which loan is better is to compare the maximum loan amount offered by the lender. 

Also Read: How to get a ₹5 lakh loan immediately?

Interest Rates

Often, interest rates for a professional loan are lower compared to a personal loan. However, this depends on the lender’s policies. You can compare all the available options and choose the loan with the lowest interest rate. 

This way, you can avoid paying higher interest and reduce your borrowing costs. At Fibe, you can easily avail of a loan at an affordable interest rate starting at 2% per month. 

By comparing the benefits of a professional loan against a personal loan, it is clear that the latter is a lot more flexible and easier to access. The Fibe Instant cash loan is a popular and reliable solution you can opt for. It allows you to get funds up to ₹5 lakhs seamlessly. We offer rapid disbursal, flexible tenure options of up to 36 months and an option for pre-closure without additional charges. 

Download our Personal Loan App or visit our website to apply for an affordable offer.

FAQs on Personal Loan Vs Professional Loan 

What is the difference between a personal loan and a professional loan?

What is a professional loan?

It is a special type of loan designed to cater to the needs of self-employed professionals, such as:

• Doctors
• Lawyers
• Chartered accountants 
• Company secretaries, etc.