Best Reasons to Avail a Personal Loan
Most of you think personal loans should be avoided as they result in debt formation. However, that’s not always the case. A personal loan, whether availed through banks, NBFCs, or loan apps like Paysense, comes to your rescue in most situations in your life. Here in this blog, you will learn everything you must know about personal loans.
What’s a personal loan?
A personal loan is a credit option that you can take up from financial institutions like banks or NBFCs (non-banking financial institutions) without the need for providing any security or collateral and with lower documentation. It makes complete sense to avail a personal loan when you witness a specific financial requirement. You can use such credit options to meet any of your needs, and requirements with zero restriction on the usage of the personal loan. You will require repaying your personal loan same as any other credit option, at a rate of interest that you have agreed on to pay the financial institution. The repayment tenure of loan may be just a few months to just a few years, which you must repay in the form of EMI (equated monthly instalment).
What’s a personal loan utilised for?
When you place an application for a home loan, borrowed funds have to be utilised to purchase a home only. In the case of an education loan, the loan proceeds can be used for education requirements only. In the case of an auto loan, you can use the car loan proceeds for purchasing a car only. However, with a personal loan, this is not the scenario. Personal loan is not tied to any specific use. You can use the proceeds towards any requirement, may it be for a vacation abroad, healthcare exigency, wedding, or home renovation, etc.
How can you qualify for availing a personal loan?
You can place an application for a personal loan with any NBFC or bank. Ensure to look for options that endow you the access to finance at the lowest rate of interest possible. Once your loan application is approved, the required funds are instantly credited to your account.
You may have to begin paying the loan EMIs from the next month post availing the personal loan. Most personal loans have a fixed rate of interest attached. This means, you will require bearing fixed EMI payment each month. You can avail the loan with zero requirement for providing any security or collateral.
What are the best reasons to apply for a personal loan?
Now that you are aware about what personal loans are and how they function, let’s try and understand for what reasons you may avail the same. One thing you should understand is that personal loans once disbursed will result in an influx of the funds in the bank account. However, it even requires to be repaid. Thus, it is better to have a proper repayment plan before you opt for a loan. If you do not have any budget in place to place your monthly EMI, it is best you delay your decision till you are in a position to at least pay the monthly loan EMIs on time.
What are the crucial reasons you must consider before you apply for a personal loan?
Debt consolidation
Debt consolidation is one of the prudent reasons for availing a personal loan. You might have availed 2-3 loans and managing them might become tough. When you place the application for a personal loan to pay off your multiple other loans involving your credit cards, you require combining everything into a single payment. This makes the debt repayment procedure simply for you. If this includes loan against credit card too, you get the choice to pay your loan at lower rate of interest. It assists you to lower your interest constituent that you require paying.
For healthcare exigency
In case you require funds for healthcare exigency, one of the best options for you is to avail a personal loan. Not all the medical exigencies are covered by an insurance cover. You can use the loan proceeds to pay for all your healthcare expenses or medical costs – right from hospitalisation to medical costs with zero hassle.
Home renovation
In case you are looking to renovate your home, you can consider availing a personal loan. Through personal loan proceeds for home renovation, you can ameliorate your home’s value. Note that home renovation is crucial every few years. Even if you are looking to sell out your home, you can make use of the personal loan to simply renovate the same and enhance its value. Once you are able to sell your house, you can repay your personal loan in totality using the additional proceeds received.
Huge purchases
Very often, when you require making massive buys, you tend to do it through your credit card. It is a prudent choice just if you can repay your credit card dues in totality. In case you cannot, there is a high rate of interest that you may have to pay each month. It can be one of the prudent reasons for availing a personal loan. You can make use of your personal loan for making massive purchases like a washing machine, television, and pay for such goods through the EMI mode at a lower rate of interest through nbfc and loan apps.
Wedding expenditures
Wedding or marriage is a very costly affair and if you do not hold the required cash to make the required buys, a personal loan can assist you to fund your dream marriage. You can make use of the personal loan to make payment for your big-ticket purchases like wedding dress, venue, photography and others. Also, you can opt for a personal loan for meeting your marriage costs if you do not want to deplete or hamper your investments or savings in wedding expenditures.
Vacation expenses
In case you have for a very long time wanted to go on a dream vacation and are saving plenty of money for the same, then you can go on the desired vacation today by availing a personal loan and using the savings to repay your loan in the form of comfortable EMIs.