June 18, 2024

What’s The Need & Importance of Opting for a Personal Loan?

A personal loan is an unsecured credit option that can be utilised for various purposes like debt consolidation, huge purchases, exigency expenses, and others. Such loans are repaid typically on monthly basis over a 2-6 years’ time frame. However, at times it may be longer even based on the payment diligence and circumstances.

Listed here are a few of the crucial popular reasons for taking up personal loans –

∙       Clear your credit card dues

∙       Fund a new venture

∙       Improve your credit history

∙       Healthcare exigencies

∙       Going on a trip abroad or any vacation trip

∙       Funding wedding expenditures

∙       Purchasing your dream 4-wheeler

∙       Funding big-ticket buys

∙       Home renovation expenses

∙       Higher education

So, for all these purposes mentioned above, you can opt for a personal loan of an amount starting from 20,000 loan to as high as Rs 40 lakh. There is even a personal loan without CIBIL score for those who are new to credit or have a low credit score. However, such loans are often disbursed at a higher interest rate and processing fees to make up for the higher associated credit risk.

Clear off your credit card debt

Credit card dues may be extremely hard on your pocket. With a rate of interest of 52 per cent, this is a costly debt to hold and if repayments are not done as soon as possible, then your score may be impacted negatively. As an outcome, availing a personal loan with an annual rate of interest ranging between 12 and 24 per cent per annum is a way better choice. You save considerable money on interest constituents while maintaining a good credit history.

Fund a new venture

Inadequate funds can put a full stop to your passion and dream of beginning a new business or start-up. A personal loan, in contrast, can help you in attaining finances to fund your business. Moreover, you can apply for a business loan, but in this case, you must consider proving your financial history as well as tax-linked documents, which is impossible in the case of a new business. As an outcome, a personal loan would be a considerably practical option for pursuing as it is way simpler to take up.

Ameliorating your credit record

When it is regarding credit cards and loans, your credit score is extremely crucial. If you do not hold a strong score, a personal loan might be able to assist you to get it. Most apply for a small personal loan to ameliorate their score as by repaying the loan EMI timely by the due date, you can establish a strong payment history, which shows the lender your credibility. Paying loans timely eventually raises your credit score, permitting you to place applications for bigger loan proceeds in the upcoming times.

Medical exigencies

Deterioration of the quality of life owing to lifestyle parameters might necessitate the usage of healthcare processes during such events. Insurance policies hardly cover all the aspects of healthcare processes. Specific treatments and diseases that you might require to undergo are not covered under the insurance policies. Healthcare policy clauses might even need you to pay a specific amount out of your pocket. In such scenarios, a personal loan for healthcare exigency is the perfect option available in the market. The loan proceeds can be utilised to cover any of the medical costs or therapies that you might need.

Go on a trip

You must have heard this saying “Life isn’t a destination to reach anywhere, but a journey to be a witness”.

Travelling or visiting new locations can allow you to refresh your soul as well as break the monotonous routine in your regular life. It is always a prudent decision to make your constant savings towards vacation goals where you can aim to accumulate a good, healthy amount to mitigate your vacation expenditures.

However, in the midst, making advance bookings for expenses, particularly for hotels, flights, etc., can assist you to acquire a considerable price benefit, thus reducing your thorough travel budget. You can take up a personal loan for the purpose to travel to simply make sure of advance payments as well as repay such loans with periodic savings or investments at late life stages.

Wedding expenditures

Must have heard “marriages are heavenly i.e., made in heaven”. However, weddings are celebrated on earth where you require a considerable amount of money to celebrate this occasion. With the intent to effectively celebrate the wedding in a grand manner, wedding costs often may go off budget. In place of witnessing financial stress, you can take up a personal loan for wedding expenditures and then repay systematically the loan through monthly instalments.

Purchasing a new 4-wheeler

A personal loan is an option for funding the buying of your dream bike or car or even boat. It is even one way to pay for a 4-wheeler if you are not buying it from the manufacturer directly. For instance, if you want to purchase a used 4-wheeler from another consumer, a personal loan can permit you to do this without depleting your savings bank account.

Funding a big ticket buy

You can get a personal loan to finance any big ticket buys like a laptop, washing machine, fridge, laptop, etc. This is an extremely prudent mode than spending a huge sum of money in a month. A personal loan permits you to defer huge expenditures over future months as it is to be paid back in monthly instalments.

Higher education

While you might have prioritized your ward’s career aspirations and made periodic savings towards this, the rising education expenses might result in some deficit towards financial goals. You can avail a personal loan to bridge the deficit and allow your kid to get admission in the desired college as well as stream not permitting any financial strains to alter this goal.

Home Renovation

You often spend a considerable amount of time with friends and family at home. Getting your home renovated can often be your desire but a relatively higher expenditure might make you push it down your priority list.

However, the loan mention above must required your CIBIL score to get the lowest interest rates. But small loans of Rs 10k or 50k loans you may get personal loan without CIBIL score. As banks are offering these loan with checking your credit score then the chances of charging high interest rates will be high. Moreover, you can start taking small amount of loan as a beginner to improve your credit history. This will help you to take loan of higher amount at low interest rates.

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