Small loans are which are borrowed from a financial institution to meet immediate finance requirements. They are approved quickly and are also comparatively easy to avail. Most importantly they are a safe bet in times of need. Borrowers can borrow any amount from 5000 to 1 lakh rupees and the loans are approved instantly. The amount also gets directly credited to your bank account within a day or two.
Small loans give you the benefit of repaying a lent amount within a comparatively short duration of time. Although the repayment principles and procedures may differ in accordance with the guidelines as set by the lender – small loans usually serve convenient functioning to all its borrowers. While also, mostly, small loans do not require collateral. In place of all the stringent formalities, there is just a well-put and thorough background check to fill the needs of whether or not to approve the loan application.
Benefits of Small Loans
Considering how the cash involved is not very huge and easily repayable, small loans get smooth approvals as well. It helps you fulfil your monetary obligations and commitments by making fewer compromises and moving forward with zero regrets and guilt. Let’s understand the benefits of small loans and how you can avail them.
- Small loans give you the power to make a smart choice in accordance with your personal circumstances. For instance, if you possess a low or demeaning credit score and intend to apply for a small loan so as to enhance your situation; you can repay the loan within or before time and reap the results! This will also benefit you in your next opportunity with comparatively lower interest rates.
- A small loan will be handy and allow you to lessen your burdens in adverse financial situations, such that it improves your image and reputation in the society. Even if your lender might charge a fairly higher rate of interest – at the time of repayment and end-term of the loan – you tend to pay significantly less amount of interest in comparison to lengthy-duration loan.
- In today’s competitive and excessively dynamic environment, it is essential that you step out of the vicious circles of debt and dues. Small loans help serve the purpose by helping you maintain a financial balance what comes handy in times of need. When you take a small loan for debt consolidation – let’s say for a tenure of 12 months – you tend to merge all your outstanding dues into that one-monthly repayment. This gives you breathing space and long-term timeline for working things out while also ensure removal of financial pressures.
- Such lower rates can also help you reduce the wholesome time spent in the repayment of your outstanding balance by curtailing the interest accrued and assist you in paying off your credit card bills with comfort as well.
- One of the most interesting perks of taking a small loan is the essence of foreseeability in it. In other words, to appraise your financial capabilities, short-term or small loans ensure that you aren’t stuck in long and hefty repayment periods of 5 to 30 years i.e. an extended period. This also amplifies your financial worth as an individual.
Tax Benefits
Small personal loans benefit an individual when it comes to tax deductions as the following methods:-
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Investments
A small loan is a go-to for an entrepreneur as it ensures easier access and attainment of money than other types of business loans. Since the proceeds are contributed to the business, it can be acclaimed as a business expense that can lawfully be deducted from the final books of accounting and deduce outgo, simultaneously lowering the income tax.
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Purchase Assets
You can use your small loan proceeds to purchase assets like equity shares, gold or other asset types. In many cases, the interest due on the small loan is lesser than the asset’s appreciation over time. Even better, you own an appreciating asset which adds to your net-worth.
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Investment on Education
Under Section 80E of the Income Tax Act, if a small personal loan is used as an investment for higher education purposes for any familial relation, it can be claimed towards tax exemption. Do consider a small loan to fund a professional certification or an education degree for better career prospects and for availing tax benefits.
Small loans by nature add convenience in the lives of people and lighten the idea of taking and repaying the loan as not an obligation but financial favour. If you’re looking to make some purchases in near future then opt for a small loan on NIRA’s website or mobile app. Your small loan application will be processed instantaneously and the loan proceeds credited to your bank account in no time.
