Personal Loans—A Good Idea To Buy Holiday Gifts

A personal loan is usually an unsecured form of credit, which means the borrower is not required to pledge any asset with the lender as collateral. This makes personal loans a convenient option to fund all kinds of requirements with ease, and not necessarily used only in times of financial emergency.

Every year, ​people spend large amounts of money on new electronics, furniture, clothing and to buy gifts during the festival season. With the rise in costs and increasing social obligations it is common for the cost of their purchases to exceed their savings, leaving them in a tight spot.

While one should plan to save for big purchases or expensive holiday gifts, but the process is time-consuming and is dependent on many variables, especially for salaried individuals who have a limited amount to spend each month. They also have to save for a financial or medical emergencies.

Therefore, to avoid any financial strain, a personal loan is a good choice for the purpose of funding the holiday gifts as the borrowed amount can be returned in easy monthly installments rather than saving up over time for a big purchase.

It must be noted that since personal loans are unsecured and usually do not require any collateral, they carry higher interest rates than secured loans as the lenders take a bigger risk while offering such loans.

Personal Loans For Gifts

There are many advantages of taking out a personal loan to buy gifts for friends and family. Here are some of these.

Can Be Raised Quickly:

Most lenders make use of advanced technologies to complete the loan process quickly and without giving the borrower any trouble or delay.

If the borrower’s paperwork is in order, the lender has verified and examined the borrower’s credit history and CIBIL score to their satisfaction, and all know-your-customer (KYC) requirements have been met, it shouldn’t take more than a day or two for the borrower to receive the loan disbursed into their account.

Most reputable lenders, including banks and non-banking financing companies, typically take one to seven days to authorize a personal loan before disbursing the funds.

Simple To Obtain:

As personal loans attract a higher rate of interest due to their unsecured nature, banks and NBFCs are keen to get more borrowers for this loan and therefore ease the eligibility criteria for availing such loans.

The personal loan application process depends on the income proof, age, credit history and CIBIL score and a few other factors. Since the loan is unsecured, lenders assess the eligibility of the borrower with their credit score, or CIBIL score. A higher score makes it easier to get the loan sanctioned and vice versa.

Therefore, with the correct documents and a good credit history, a borrower can get the loan easily even at short notice during the festival times when people need to buy gifts for their near and dear ones.

Flexibility Of Use:

Unlike other targeted loans like a home loan or auto loan, the borrower is not required to disclose the purpose of the personal loan or the timeline for using the money. The borrower is free to use the personal loan however they see fit. Therefore, a personal loan can also be utilised to achieve lifestyle objectives including purchasing gifts during the festivals and holidays.

Can Bargain For Lower Rates:

Given that the lenders try to push for personal loans that carry a higher rate of interest, the borrower can negotiate for the best interest rates possible if one has the required documents and a good credit record. At times, lenders also offer pre-approved personal loans to existing clients that have a steady income and a good track record of repaying loans on time. This makes personal loans a viable option for extra expenses such as purchase of holiday gifts.

Flexible Loan Tenure:

As one has a advance knowledge of the festive days or when the purchase of gifts for the holidays will be required, the borrower can choose a repayment schedule that suits one’s need depending on the repayment capacity. A personal loan typically has a term of three months to 60 months. The longer the tenure, the smaller the monthly payment, or EMI. However, interest rates also change according to the tenure of the loan.

Conclusion

Any expense including purchasing holiday gifts can be covered by a personal loan from banks or NBFCs like IIFL Finance, especially if the borrower does not have a capacity to save for such purchases and does not want to liquidate any assets.

With the option to pay in installments, personal loans do not put any pressure on one’s monthly budget rendering such loans as a good option to fund one’s non-urgent purchases such as gifting over the holidays.

Personal loans are easy to get and, if applied for online, can be made available right away. IIFL Finance processes a personal loan application within a few minutes. If the loan application and documents check out, the company credits the money into the borrower’s account within 24 hours.