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When Should I Get a Personal Loan?

IndianMoney.com Research Team | Updated On Monday, November 11,2019, 05:26 PM

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When Should I Get a Personal Loan?

 

 

A personal loan is a one-stop solution for all your short-term financial needs. Regardless of what you need funds for, a personal loan can prove to be handy when you are financially down or require financial assistance the most.

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When Should I Get a Personal Loan?

Online personal loans are easy to apply and convenient ways to fund your expenses. While people opt to use a personal loan for funding vacations or a professional course there are other ways you can put a personal loan to use. These are certain instances when a personal loan can actually benefit you:

Home Improvement:

Taking a personal loan for home renovations can actually save you money in the long run. That’s because the total cost of home repairs can increase the overall value of your house. If you are planning to sell the home then this will increase the overall price of the property.

But if you are availing a personal loan for the renovation of your resident even then you can benefit by availing a personal loan. An advantage of taking a personal loan is that you don’t have to mortgage your home or any other asset to get the loan sanctioned. Since personal loans are unsecured loan they come with high-interest rates.

See Also: Know All About Pre-Approved Personal Loans

In Case of Emergency:

Most often people forget to plan for financial emergencies while saving money. It is imperative to keep an emergency fund handy to tackle situations when you are in dire need of money. However, people often come across such situations and finally resort to personal loans.

Though it is not advised to avail of personal loans unless a grave financial situation arises, it can help and resolve cash emergencies like medical expenditure, urgent cash requirements for the business. But personal loans are expensive and you must only avail it if you have the capacity to repay.

Unplanned Expenses:

No matter how much you plan for your expenses, an unplanned expenditure has to potential to derail all your financial plans. A personal loan can also be of great help in covering unexpected expenses like the cost of a funeral or medical expenses due to an accident. Though it is an uncomfortable area to discuss, a personal loan can save your day in the event of death or accident of a family member. For example, it can help you conduct the funeral of a family member in case of his/her sudden demise. Such costs can quickly add up to 2-3 lakhs considering the cost of a funeral, home service, and other related costs.

See Also: How to Get a Better Interest Rate on a Personal Loan

Wedding:

Most often people apply for wedding loans to cover wedding costs. In India, weddings can be expensive and can lead to the depletion of your savings. It doesn’t make sense to liquidate all your savings for marriage when you have the option to avail a personal loan. A personal loan can be a good idea to carry your marriage expenses.

You can use the lump sum amount for big expenses like booking the venue, bride ornaments, and dress, booking the wedding coordinator, photographers, etc. With a personal loan, you can plan and execute your wedding just the way you have dreamt. You can later repay the loan through EMI by extending small amounts from your salary towards your loan.

Medical Expenses:

Medical expenses are the most common reasons people avail loans from private lenders. Given the cost of medical treatments in India, a critical disease or extended stay at the hospital can land you in financial trouble. People with no health insurance receive the worth hit.

So, a personal loan can be the best choice for you if you are about to undergo a surgery or a medical procedure anytime soon. Since personal loans allow you to use the money for any purpose, you can cover a wide range of expenses like medical bills, doctor’s fees, and cost of medicines with the loan money. Shop around to get better terms and interest rate on your personal loan.

See Also: How to Get Personal Loans Instantly?

High-Interest credit card payment:

A personal loan can prove to be extremely beneficial in tackling situations like high-interest credit card payment. If you have availed credit in one form or the other and it entails an extremely high-interest rate on your outstanding balance, then availing a low-interest personal loan allows you to settle the debt at minimum interest charges. You can save a considerable sum of money by paying off the personal loan at a lower rate on the outstanding balance. For example, if you are paying an interest rate of 24% on your credit card and if you avail of a personal loan with a 12% interest rate then you will get a dual benefit. You can pay off your credit card bills and you can save a significant amount of money on interest in the long run. It will also help to improve your credit score.

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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