More and more people are taking a personal loan nowadays for multiple financial reasons especially the more expensive ones. Personal loans help the individual and households meet any shortfall when it comes to certain purchases.
‘A personal loan is an unsecured loan that people usually take from a bank or non-banking financial companies (NBFCs) to meet their personal needs.’
A personal loan isn’t backed by any collateral unlike a home loan or a car loan. However, personal loan interest rates are higher than the interest rates of a home or car loan due to the amount of risk when sanctioning it. As in the case with any other loan, it is advisable to complete the payments on a timely basis so as to make sure your credit report does not get harmed.
There are many reasons people take a personal loan such as children’s further education, hospital expenses, etc. Here are the top 5 reasons people take a personal loan in no particular order:
Pay for home renovations/remodelling-
Whether you want to repaint your entire house, put newer and classier home appliances, change the entire look of your home; a personal loan can help you achieve your renovation dreams. The most in-depth planning and research might fail you sometimes, thus availing a home loan will help with the additional expenses. Even if you are not planning on selling your home at this particular time, renovating your home can add property value making your home worth more.
Pay off credit card and other debts-
Multiple loans and outstanding credit card dues with varying interest rates and EMIs can cause you a lot of financial trouble. Taking a personal loan can help solve these problems. You can pay off your debts with the money you get from a personal loan leaving only one monthly EMI that you need to pay.
Pay for the wedding of your dreams-
In India, weddings are a lavish and costly affair. Not everyone can afford the costs of jewellery, caterers, clothes, etc. This is where a personal loan comes in handy. It can be used for the bigger purchases such as gold, bridal outfits, wedding venue, and for the smaller purchases like a wedding planner, flowers, and sound systems, amongst others. You can also take a personal loan to also pay for the wedding rings that can easily take up a few months of your salary.
Paying for moving expenses-
Moving within the same country or the same state does not need much financial planning apart from the living expenses. However, a major distance relocation can put a dent in your bank account. This is where a personal loan can help you out. However, before you take a personal loan, make sure that your salary is enough to pay off the monthly EMIs and have you living comfortably in your new place.
Pay off medical bills-
Unfortunately; medical treatment has become quite expensive, especially in case of a terminal illness or other serious problems. Another unfortunate thing is that medical treatment cannot be avoided as it can easily turn into a life or death situation. Personal loans can help you pay off your medical expenses.
Before taking a personal loan, research about different lenders, personal loan interest rates, and your eligibility to avoid problems in the future. Good luck with your financial endeavors and we hope this article gave you an idea of when to take a personal loan!