Personal Loan Tips
With the increase in disposable incomes, our dreams have gotten bigger. Our aspirations are no longer boxed within the four walls of food, clothing, shelter, and water. We want more from life. However, in some cases, we are often limited by the lack of resources like money to finance these dreams. In such a situation, loan facilities come to our rescue.
If you think that applying for a loan would involve mountains of paperwork, uncountable trips to the bank, and unnecessary hassles, then you would be surprised to learn about how technology is making instant loans a reality! As long as you meet the personal loan eligibility criteria, you can effortlessly draw the money in your bank account.
But what are personal loans? And where can you use them? Let’s find out!
What is a Personal Loan?
As the name suggests, personal loans refer to the money borrowed by an individual from a bank or a non-banking financial company (NBFC) to meet their personal requirements. This loan is granted on the basis of key metrics such as their income level, employment history, credit history, repayment capacity, etc.
Personal loans are not secured against any collateral and are sanctioned at higher interest rates due to the associated risks. Defaulting on the repayment of your personal loan could negatively impact your credit report and make you ineligible for future loans.
Use of Personal Loans
Now that you have a broad understanding of personal loans let’s have a look at what you can do with the money gained through a personal loan.
Debt consolidation is one of the commonest reasons for taking personal loans. If you have borrowed money from different sources at varying rates of interest, you can standardize it with the help of a personal loan. A personal loan would consolidate the various financial liabilities into a single monthly payment. Thus, the multiple debts get grouped together, and you can pay them off within a stipulated time frame without getting confused or overwhelmed.
In certain cases, the rate of interest on personal loans would be lower than the interest rates of other loans. Hence, it also helps in saving on the amount paid as interest.
If you are seriously considering re-modelling your home, then you could finance it with the help of a personal loan. It can help in making bigger and better additions or changes to your home that will pay for itself in the longer run. Renovating is as good as purchasing or moving to a new home! Certain banks incentivize personal loans for home renovation if the borrower plans on making sustainable or green additions to their homes.
Medical Emergencies are one of the leading reasons for individuals applying for personal loans. From fertility treatment and cosmetic procedures to treatment of chronic diseases and complicated surgeries – a personal loan could cover the expenses incurred during planned and unforeseen medical expenses.
Purchasing High-Value Consumer Goods
From purchasing a 50-inch 4K Smart TV to your wedding diamond ring – personal loans could support most high-value purchases. In fact, some individuals prefer personal loans even for the purchase of automobiles! So if you plan on buying expensive consumer goods like appliances or jewellery, doing so with the help of a personal loan could be a great idea.
Destination weddings are “in”, and if you wish to splurge and go all out for your special day, you can do so with the aid of a personal loan. You can apply for a personal loan to purchase big-ticket items like that much-coveted Sabyasachi lehenga!
Have you been putting off a much-needed vacation due to the lack of finances? Stop procrastinating and apply for a personal loan instead! Visit foreign lands, indulge in your wanderlust, take a luxury cruise, or go on a second honeymoon with the financial aid of a personal loan.
Supporting Friends or Family
Do you wish to offer monetary assistance to a close friend or family but lack the finances to do so? In such a case, you can take out a personal loan to help them make ends meet. However, ensure that you keep to making the payments on time lest delayed payments hurt your credit score at the cost of your philanthropy.
Personal Loans enjoy great popularity due to their versatility in financing a range of personal needs. Further, you can avail a personal loan easily with minimum documentation. A personal loan can help in solving a number of financial issues and enhance your life in many ways. However, do weigh in on how affordable it will be to make the monthly payments and the cumulative interest involved.