From Wish List to Reality: How a Personal Loan Can Bridge the Gap

Your bucket list is filled with goals, from travelling to your dream destination to buying something expensive. Balancing all your expenses, saving goals, and future plans is crucial to turn these wishlist items into reality. A personal loan can help you achieve your financial goals and bridge the gap between dreams and reality.
But that’s easier said than done, right? With the right personal loan, you can close the gap between when and how.
It helps you plan your finances smartly, so achieving your dreams does not affect your savings or basic expenses.
With our handy guide, you’ll see how personal loans turn dreams into plans. As a loan for personal use, a personal loan offers flexibility to meet your individual needs. Unlike a traditional loan, which often comes with longer repayment periods and slower approval processes, a personal loan offers quicker access to funds for your immediate needs.

 

Introduction to Personal Loans

Personal loans are a popular financial tool that allow you to borrow money from banks, NBFCs, or online lenders without the need to pledge any collateral. This means you can access funds for a wide range of needs—whether it’s covering unexpected medical bills, planning your dream wedding, or consolidating existing debt—without risking your assets. One of the main attractions of personal loans is their flexibility: you can use the loan amount for almost any purpose, and you benefit from a straightforward application process and quick approval.
Unlike loans that require you to put up property or other significant assets as security, a personal loan is an unsecured loan, making it accessible to a broader range of borrowers. With flexible repayment options, you can choose a repayment period that fits your budget, allowing you to repay the loan in manageable installments. This is especially helpful when you need funds quickly and want to avoid the lengthy approval times often associated with other types of loans.
It’s important to note that personal loans differ from bridge loans, which are typically used in real estate transactions to bridge the gap between buying a new property and selling your current one. While bridge loans serve a specific purpose and often require collateral, personal loans offer more general financial support for your personal goals.

Why Personal Loans?

What makes a personal loan stand out is its flexibility. You are not restricted to one purpose. Rather, you can use it in a way that best fits your needs, whether for buying that high-end smartphone or planning a trip with friends who have stayed long in your chat.
Don’t have time to visit the bank or NBFC multiple times to complete the loan process? You don’t need to. Banks and NBFCs offer personal loans both online and offline. You can apply for a personal loan online, and the application process is streamlined—often fully digital, allowing you to complete KYC verification and submit documents without visiting a branch.
It offers the financial fuel you need. Here’s why it’s so effective:

Lesser Risk

Personal loans are unsecured, which means you face less risk compared to other loans. Unlike secured loans, personal loans do not require collateral, so you are not required to pledge property or assets to obtain the loan. Lenders assess eligibility criteria such as age, income, and credit score before approving a personal loan. You do not risk losing your possession to foreclosure if you are unable to repay.
Plus, if you make timely payments, you can improve your credit score. Your repayment capacity is also evaluated to ensure you can manage the loan repayments. So, in the future, you will get better rates and pre-approved options.

Also Read: Missed a Digital EMI Payment? What to Do Next 

Lump Sum with Quick Disbursal

Don’t have time to visit the bank multiple times to complete the loan process? You don’t need to.
With companies like Hero Fincorp, you get personal loans up to 5 lakhs through the instant loan app. Just fill out the application form, and if approved, you get the sum within a short time.
Now you can easily support major events like a marriage or home renovation.

Flexible Repayment Terms With Competitive Interest Rates

You get to choose the repayment tenure based on your affordability. The loan term determines how long you have to repay the loan. You can set a short or long repayment schedule, so you choose the amount you can comfortably pay without putting strain on your monthly budget.
Hero Fincorp offers personal loans at competitive rates with low processing fees, so your monthly payments are smaller. Processing fees may vary between lenders and can impact the total cost of borrowing. The interest rate is the percentage charged on the principal amount, and it affects the total cost of the loan. The principal amount is the original sum borrowed, and interest is calculated based on this amount. Other factors, such as loan tenure and borrower profile, also play a role in determining the total cost of the loan.
Also Read:What is the Personal Loan Processing Fee? 

How Personal Loans Work

Personal loans work by providing you with a lump sum of money that you can use to meet your financial needs, whether it’s for a major purchase, emergency expenses, or even a family celebration. Once approved, you receive the loan amount upfront and repay it in equal monthly installments over a fixed repayment period, which can range from a few months to several years, depending on your agreement with the lender.
The interest rate on a personal loan can be either fixed or variable, and it’s determined by factors such as your credit score, income, and the lender’s policies. Unlike traditional loans, personal loans often feature a simplified application process with minimal paperwork, making it easier and faster to get the funds you need. For example, if you face an unexpected medical emergency, you can apply for a personal loan online, receive quick approval, and have the money disbursed to your account in a short time—helping you cover expenses without delay.
This streamlined process and quick access to funds make personal loans an attractive option for those who need financial support without the hassle of lengthy procedures or extensive documentation.

Eligibility and Requirements

To qualify for a personal loan, you’ll need to meet certain eligibility criteria set by lenders. Most lenders look for a stable income, a good credit score, and a strong repayment capacity. They will assess various factors, including your monthly income, credit history, and existing debt obligations, to determine your eligibility and the loan amount you can borrow.
Your credit score plays a significant role in the approval process and the interest rates you’re offered. Borrowers with higher credit scores and steady incomes are more likely to receive competitive interest rates and higher loan amounts. On the other hand, if your credit score is lower or your income is less stable, you may face higher interest rates or stricter repayment terms.
It’s also worth noting that bridge loans generally come with higher interest rates than traditional loans, but they can provide quick access to funds for specific needs, such as covering expenses during real estate transactions. For personal loans, lenders focus on your ability to repay the loan and your overall financial health, ensuring you can comfortably manage the monthly payments.

Application and Processing

Applying for a personal loan is designed to be simple and convenient, especially with the rise of online and mobile platforms. You can start the application process by submitting your personal and financial details, such as your income, employment status, and credit score, through a lender’s website or app. The lender will then review your information to assess your creditworthiness and repayment capacity.
If your application is approved, the loan amount is quickly disbursed to your bank account, and your repayment period begins as per the agreed schedule. To ensure you get the best deal, it’s wise to compare interest rates, processing fees, and repayment terms from multiple lenders. Some lenders may offer lower interest rates or more flexible repayment options, while others might have higher processing fees or stricter foreclosure charges.
Payment flexibility is another important factor—look for lenders that allow you to prepay or foreclose your loan with minimal charges, so you can save on interest if your financial situation improves. By carefully reviewing these aspects during the application process, you can choose a personal loan that best fits your needs and budget.

Loan Options and Creditworthiness

When it comes to personal loans, you have a variety of options to choose from, including fixed-rate loans, variable-rate loans, and even lines of credit. These loans are offered by banks, NBFCs, and online lenders, each with their own eligibility criteria and interest rates. Your creditworthiness—determined by your credit score, income, and other financial factors—plays a crucial role in the type of loan and terms you qualify for.
A strong credit score can help you secure lower interest rates and more favorable repayment terms, while a lower score may result in higher interest rates or limited loan options. To maintain or improve your creditworthiness, make sure to pay your EMIs on time, keep your credit utilization low, and regularly check your credit report for errors.
In addition to personal loans, you might also consider other options like home equity loans or bridge loans, especially if you have significant assets or are involved in real estate transactions. However, keep in mind that home equity loans and bridge loans often require collateral and may come with higher interest rates, particularly if your credit profile is less than ideal.
By understanding your credit profile and exploring different loan options, you can make informed financial decisions and choose the loan that best supports your goals—whether it’s funding a major purchase, managing cash flow, or investing in your future.

Here's When A Personal Loan Turns Plans Into Reality

A personal loan moulds to your unique expectations. You want to celebrate major milestones? Check. You want to get a luxurious interior done? Covered.
From major celebrations to essential investments, here's how a personal loan transforms "wish list items" to "done list" achievements.

Travel and Vacation

Planning for your dream vacation that costs 2-3 lakhs, but don’t want to dip into savings? A personal loan helps you cover airfare, accommodation, and other expenses, and you can choose a loan amount that is sufficient to cover expenses for your entire trip. So, instead of depleting your emergency fund, you spread the cost in monthly instalments.

Home Improvement And Renovation

Thinking about remodelling your kitchen or fixing those long-pending home repairs, but it costs 3 lakhs or more upfront? A personal loan helps you cover the cost. You can borrow the money you need upfront to complete your home improvement project without delay. You don’t need to wait for the right time. You can get the work done now and repay in affordable EMIs.

Education Expenses

Funding your education at your dream university comes with costs for study materials, education costs, and other expenses, which may run anywhere from thousands to lakhs. A personal loan offers financial support, so you can focus on your education instead of stressing about finances.

Wedding Expenses

You are planning a family wedding and want everything to be no less than perfect. However, the attire, venue, catering, decor, and other expenses require an extra funding of 4 lakhs. Should you use your emergency savings? Instead of that, you can go for a personal loan to cover these and repay in small instalments over time.

Major Event or Milestone Celebrations

Got a promotion? Celebrating the first birthday of your kid? But the party expenses cost between 1-1.5 lakhs. A personal loan helps you cover the expenses, so you don't have to cut corners or feel that financial pinch during the celebration.

Lifestyle Purchases

Whether it's a gadget worth Rs. 50000 or an art piece that costs Rs. 1 lakh, a personal loan ensures that these are not heavy on your pocket. You can buy what you want without touching your long-term savings.

Conclusion

A personal loan helps you meet the expenses to tick off your bucket list. With careful planning and comparison, you ensure that you buy the wishlist items without dealing with the financial crunch.
You don’t need to put your dreams on hold due to a lack of funds.
Thinking about long wait times and endless paperwork? That’s where Hero FinCorp stands out. With quick approval and disbursal, we offer the support you need instantly.
Remember, it is important to fulfill your loan obligation and ensure all EMIs are paid on time to maintain a healthy credit profile.
So, why wait to tick off your bucket list? Check your eligibility, calculate the EMI with the personal loan EMI calculator, and apply for a personal loan now.

Frequently Asked Questions

What is the minimum income needed to get a personal loan?

You need a minimum income of 15,000 monthly to get a personal loan.

What if my personal loan application is rejected?

If your loan application is rejected, find out the reasons that led to rejection. Your CIBIL score is an important factor in loan approval and interest rate determination, so check your score and improve it if necessary. Resolve other issues and reapply for the loan.

How do I decide if a personal loan is the right choice for my bucket-list goal?

Assess these to find out if a personal loan is the right choice:
•           Can you manage the additional cost of monthly EMIs without straining your monthly budget?
•           Is the bucket-list goal a once-in-a-lifetime opportunity?
•           Will this purchase/event lose value if I wait?
•           What is the personal value you’ll gain from achieving this goal?
If the answer supports borrowing, a personal loan may be a good option.

Does prepaying my personal loan negatively impact my credit score?

No, prepaying your personal loan does not negatively impact your credit score. In fact, timely repayment or prepayment can have a positive effect on your credit profile.

Are there any foreclosure charges if I repay my personal loan early?

Some lenders may charge foreclosure charges if you repay your personal loan early. However, these charges can sometimes be waived if you meet certain conditions, such as paying EMIs for a minimum period or prepaying from your own sources. Always check your lender’s policy on foreclosure charges before prepaying.

Are there any processing fees for personal loans or other types of loans?

Yes, processing fees may be charged for both personal loans and other types of loans, such as bridge loans or business loans. These fees must be paid as part of the loan application process and can vary by lender and loan type.

What factors are considered for loan approval?

Various factors are considered for loan approval, including your CIBIL score, income, and repayment capacity. For some loans, such as bridge loans or home loans, equity, home equity, and collateral may also be evaluated as part of the approval process.

What is a bridge loan and how does it differ from a personal loan?

A bridge loan, also known as a swing loan, is a short-term loan used primarily in real estate transactions to bridge the gap between buying a new property and selling the current house. Bridge loans are often used by homebuyers to purchase a new house before selling their current house, leveraging home equity to facilitate the purchase. Bridge loans generally require collateral, often the current house or home equity, and are commonly used to cover the down payment on a new property. Bridge loans and bridge financing are forms of short term financing, typically with higher interest rates or high interest rates compared to traditional loans. They are repaid once permanent financing or long term financing is secured.

When are bridge loans or short term loans used in business?

Businesses may use bridge loans or short term loans to manage cash flow or working capital needs while waiting for long term funding or equity rounds to close. These short term financing solutions help maintain business operations during transitional periods.

What are traditional loans and how do they compare to bridge loans?

Traditional loans usually have longer repayment periods, lower interest rates, and a more detailed application process compared to bridge loans. Bridge loans are designed for short term needs and quick funding, often used in real estate transactions or business situations where immediate cash flow is required. Traditional loans typically have a longer repayment timeline, slower funding speed, and longer loan duration, while bridge loans are meant for fast, short-term financing. Traditional loans are more suitable for long term financing needs.
 

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