Are you in need of additional cash for personal use or to set up your business? Well, there are various ways to loan or invest your money. Two of the most popular funding options are professional loans and personal loans. Based on your specific requirements, you may consider both these options and decide which one would work for you best.
Before coming to a decision, you need to know the differences between these two types of loans. You also need to take into account that they have different qualification criteria and serve other purposes. As a result, your credit is also impacted differently. Confused? This article is to enlighten you about the specifics of quick personal loans and professional loans so you can make the right choice for yourself.
What is a Personal Loan?
A personal loan is an unsecured type of loan that does not entail any security or collateral against it. You can use a personal loan for any purpose, be it for financial assistance or to set up a small business, or to make festive purchases. This type of loan is granted based on your personal credit history. Unless you have a poor credit record, there’s nothing to worry about when it comes to securing a personal loan.
Advantages of Personal Loans:
- It doesn’t take too long to get a personal loan approved, especially if you aren’t in business for quite a long time.
- You do not need to provide your assets as security.
- Personal loans can be availed with minimal documentation. This includes an ID proof, address proof, salary slips, and bank statement.
- You can use a personal loan to pay off other existing loans.
- If you’re in an emergency, quick personal loans are the best options.
What is a Professional Loan?
A professional or business loan, as the name suggests, is a type of unsecured loan granted for professional services to an individual or a business venture. It could be to fund a start-up or its payroll, buy equipment or inventory for a commercial firm, or expand one’s business infrastructure. Such loans cannot be used for personal expenditure.
Advantages of Professional Loans:
- Professional loans are granted for lower interest rates, starting at just 11.99% going up to only 24%.
- You receive a larger amount as part of a business loan, often exceeding $50,000.
- They are available in variants such as standard business loans, term business loans, etc.
- Business plans offer tax benefits helping you keep your finances separate. With these loans, you can save a lot of money that’s spent in the name of tax deductions.
- Based on your legal structure and the type of professional loan you take out, there’s a chance of your liability being more limited if you’re unable to pay.
- A business loan helps you build business credit to assure future lenders that you can repay your loans responsibly.
Disadvantages of Professional Loans:
- It’s not easy to get a professional loan approved, unless you provide a robust business plan to convince the lenders to offer you the loan.
- It can take weeks and sometimes months to review the application for a business loan. Lenders usually ask to check business credentials, including profit records, past financial statements, and logistical expenses.
- You need to provide some form of financial security against a business loan.
- You might not be granted the entire amount that you applied for. Sometimes, financial institutions only grant 70-80% of your requested amount.
Here are some of the benefits of a instant personal loan from Fullerton India:
1. Simple loan application process
2. Hassle-free documentation
3. Quick loan disbursal
4. Minimum eligibility criteria
Documents Required for Availing Personal Loan
- A duly signed application form
- Identification proof: Voters ID Card, Driving License, PAN Card, or passport.
- Address proof: Passport, Rental Agreement, Utility Bill, Ration Card, Passbook, or bank statement.
- Age proof: Passport, PAN Card, or a certificate from a statutory authority.
- Form 16
- Income Tax Returns
- Salary slips for salaried individuals and Income statements for self-employed individuals.
Going by the above pointers, professional loans score higher than personal loans in terms of customized offerings, flexible repayment options, and better pricing. In urgent cases, go for quick personal loans and don’t forget to look up financial institutions that offer low-interest personal loans. Hope this article helps you make a wise decision on the same.