Financial challenges and crunches often come in unannounced and leave an individual stumped. Be it medical emergencies, home repairs, unfortunate accidents, travel plans, or any other expense that has not been counted in, meeting a sudden cost is always a challenge, no matter how well you plan your finances. In such scenarios, an instant money loan can help you navigate through these challenges without breaking your savings. This personal advance is readily available and comes with zero end-use restrictions, thus enabling you to meet any financial needs.

In addition, when you opt for an online loan app, the entire process is digitalized, meaning you can apply for the loan, submit the documents and get the approval through your phone. There is no need to visit your lender physically. This allows you to avail yourself of an instant cash loan from anywhere and at any time.

Personal Loan – Meaning and Scope

A personal loan is a type of financing option that comes with zero security requirements. Financial institutions provide these loans to individuals against a handful of eligibility and document requirements. These loans come with no precondition to ending users and thus suitably serve as the right financing choice to meet all or any funding needs of individuals, personal or professional. These loans are easy to avail of and benefit in various ways like as affordable financing, convenient repayment, and tax savings.

Ways By Which a Personal Loan Helps Navigate Financial Difficulties

1. Instant liquidity

Personal loans can be the right financing avenue to fulfilling the instant financing needs of individuals through quick liquidity solutions. These loans come with fast approvals, making them readily available to borrowers.

Typically, for individuals fulfilling all eligibility requirements, the approval for these instant money loans comes within hours of completing the application. If applying through a personal loan app, one can expect to receive authorization for the advance within a few minutes of using it only. This follows fast disbursal, too, and with readily available financing, the borrower can easily meet their immediate funding needs. To ensure that the loan approval comes quickly, you must fill up the application form accurately and provide all necessary documents ud to the latest record.

2. Ease of access

The overall accessibility of these instant cash loans is enhanced with certain specific features. For instance, the eligibility requirements for personal loans have been reduced to a minimum today. You need to meet only the age requirement, minimal monthly income, and financial stability to avail of the advance. Documentation for the passage is convenient, too, with paperless documentation making way for fast processing.

Plus, the fact that you can apply for the loan online makes this advance accessible anytime and anywhere without any geographical limitations. Once used, the loan goes through fast processing, and you can expect quick approval depending on how accurately you have fulfilled the lender’s requirements. You should check the criteria beforehand and sees if you fulfill them adequately before applying.

3. Availability without any strain or risk on assets

While borrowing a loan, one of the biggest concerns was the loss of property or assets in case of loan repayment failure. A personal loan eliminates any such apprehension through its collateral-free financing structure. You can avail of an instant money loan against a set of lender-specific eligibility requirements only and make repayment as per the schedule without straining or risking your assets.

4. High affordability with competitive interest rates

Another reason why a personal loan can be the right financing companion during a funding crisis is because it is available at affordable rates today. You need to compare public lending institutions and find the one offering the lowest rates for maximum affordability. To negotiate the best rate possible, check and correct the risk factors associated with your borrowing profile, like the credit score you hold, your total financing availability versus the loan amount you applied for, etc.

Conclusion

With the best lending institutions and the likes of personal loan apps, securing funding up to Rs.1.25 Lakh is not much of a challenge today. Although, you must make sure that you borrow only as much financing as needed to meet your emergencies or aspirations. And make sure to have a proper repayment plan in place so you can easily repay the loan amount without straining your monthly budget or missing an EMI. To add to all this, these instant money loans are also available in high value, which makes it possible to meet big-ticket expenses without any hindrance.

Passive investment strategies are gaining traction throughout the world. It has been gaining popularity in India as well. More than 70 index funds are now available to investors nationwide. Passive funds are those that invest identically to an index they are monitoring.

Two common passive investments are index funds and exchange-traded funds (ETFs). Since ETFs may be traded on the stock market, just like stocks, a demat account is required to invest in them. When investing in an index fund, however, you purchase shares via the fund house just as you would with any other mutual fund, and you don’t need a demat or a trading account.

But how do you choose the right index fund for you? Let us take a look.

What are index funds?

Index Funds are a kind of passive mutual fund that attempts to replicate the performance of major market indexes. The Fund Manager does not take an active part in picking sectors and stocks to form the fund’s portfolio; instead, the Fund Manager merely invests in all the companies that are included in the index to be tracked. There is a high degree of similarity between the weightings assigned to the stocks in the fund and those set to each store in the index. This is passive investing, in which the fund manager builds the fund’s portfolio by simply copying the index and then works to keep the portfolio in sync with the index at all times.

If the balance of a share within the index shifts, the fund’s management must either purchase or sell stock units to maintain the weight of the cache within the portfolio at the same level as that of the index. Even though passive management is simpler to understand and implement, the fund’s returns may not always match the index’s because of tracking errors.

Choosing mutual funds

You may discover an alternative to each of the main active mutual fund categories by looking at the many index schemes that are now available. Some index funds focus on big caps, mid caps, and small caps. You may even discover a substitute for the multi-cap and Flexi Cap categories. Some exchange-traded funds (ETFs) follow sectoral indexes such as those for the information technology industry, the healthcare industry, the auto industry, and others. Because there is such a wide range to choose from, it is simple to depend on index funds for your financial planning.

It would be best to look at factors such as investment goals and risk appetite. For instance, if you are a conservative investor, you may choose large-cap index funds that invest in more stable companies.

You may also check the fund’s performance compared to the index it follows. This is because index funds could have a tracking error.

Errors in tracking may arise for several reasons, including the fact that it is never simple to hold the securities that make up the index in the same proportion and that doing so causes the fund to incur transaction fees. Despite being subject to tracking inaccuracy, Index funds are an excellent choice for those who do not like to assume the risk of investing in individual companies or mutual funds but are interested in gaining exposure to the whole market.

Applying for a personal loan has become quite hassle-free with the advent of the online application process. Today, most leading financial institutions offer personal loans at competitive interest rates with favorable repayment tenures and minimal documentation requirements. However, some borrowers make costly mistakes while applying for a personal loan, which often leads to higher interest rates and sometimes rejection of the loan application. Here are the five pitfalls you, as a borrower, must avoid in managing your debt responsibly.

1. Not comparing interest rates

A common mistake borrowers make when applying for a personal loan is not comparing interest rates using an Equated Monthly Instalment (EMI) calculator. Individual loan interest rates can vary significantly depending on the borrower and the eligibility criteria set by the lender. So, always compare different interest rates and finalize the most affordable lender. Furthermore, comparing other charges, such as processing fees and prepayment penalties, is important.

2. Not checking your credit score

If your credit score is low, lenders may offer you a higher personal loan interest rate, which means you will pay more interest over the loan tenure. And if you have a high credit score, you could qualify for a lower personal loan interest rate and save some money. Lenders usually look at a few factors when calculating your credit score, including payment history, credit utilization, types of loans, debt-to-income ratio, and length of credit history.

3. Not checking personal loan eligibility and borrowing the wrong amount

Personal loan eligibility criteria differ from lender to lender based on factors such as age, job stability, income, employer, credit report, loan amount, and loan tenure. So, go through the lender’s eligibility criteria and find the lender for which you match all or most requirements. You can use the online eligibility calculator on the lender’s website to find the right lending partner and estimate the maximum loan amount you can qualify for.

4. Ignoring your repayment capacity

Your repayment capacity is the maximum amount you can afford to repay each month, and it’s determined by factors like your income, expenses, and other debts. Ignoring your repayment capacity is a mistake because if you borrow more than you can afford to repay, you may end up in a financial crisis. Lenders evaluate repayment capacity by computing your Fixed Obligation to Income Ratio (FOIR), which is the percentage of your income going toward debt repayment. Usually, lenders prefer applicants with FOIRs between 40%-50% (including EMIs on the new loan).

5. Opting for a longer tenure

When you apply for a personal loan, opting for a longer-tenure loan may seem like a good option to reduce monthly payments. However, it can cost more long-term since the outstanding amount attracts interest each month. While shorter tenures lead to higher EMIs, they can significantly reduce interest costs.

Closing thoughts don’t apply in haste if you have decided that an instant personal loan is necessary. Go through these points and try not to commit such mistakes while using them. Exploring different options and remaining well-informed about personal loans is always better before availing of one.