Benefits Of Loan
A loan is an amount of money borrowed from one individual or entity to another for a set period within an agreed repayment schedule. The repayment amount will depend on the three components of a loan – principal, rate of interest, and tenure for which the loan is availed. It is one of the primary financial products of banks or NBFC (Non-Banking Financial Company).
Loans can be valuable in helping you achieve your financial goals like;
- paying for assets – e.g., vehicles, computers, plants, and equipment.
- start-up capital (business loans).
- projects and contracts execution
- consolidate existing debts etc.
Depending on the type of loan, applying for a loan has its benefits and they include the following;
- Financial Flexibility: Taking a loan, to a certain degree helps you meet some financial obligations, equips you to make big payments, or take care of one-time expenses without upsetting your planned budget.
- Quick to access: The process of applying for a loan is normally very quick in comparison to seeking ‘other forms of funding’. (Note: other forms of funding). And thanks to technology retail lenders approve loans as quickly as 48 hours based on details of the income financial history of the borrower and in some cases the collateral to be attached.
- Get required amount: Based on your income and financial history, the amount you require as a loan can be disbursed to you.
- Convenient tenure: The tenure of a loan is ample depending on the bank and amount. Loans are generally available for a tenure of 6 months to 24 months or even more.
- Tax Benefits: According to the CITA Section 11 (2) of the finance act 2021, almost all types of loans offer tax benefits that you can avail.
Side Note: It is not a good idea to take out a loan for ongoing expenses, as it may be difficult to keep up with repayments.
