Though we all prefer avoiding loans in our lives, availing a personal loan can be a feasible choice in some circumstances.
However, the facts confirm that car loans, home loans offer appealingly low yearly rate rates (APRs) but can be availed only for specific purposes. While on the other hand credit cards come with no end-use restriction but here the sad part is credit cards come at very high rates and have limits within which one can borrow.
But wouldn’t it be nice if you could get the best of both under one loan.
No end-use restrictions and yes comparatively low rates than a credit card. Can be used to make a big-ticket purchase without any limit. Yes! it’s a personal loan which comes with all these benefits. As you can use a personal loan for anything and everything (legal reason).
However, the loan can be availed to fulfil any of your business needs, it’s not always advisable to go for it. The interest rate charged against your borrowing here is a bit higher and thus, you should always think twice before you borrow and always consider your repayment capability and take this loan only for sensible reasons.
Here are some situations where availing a personal loan can make great financial sense.
Medical emergencies are so unpredictable and can come up at any time. There are times when one doesn’t have adequate savings to meet their medical expenditure. Having medical insurance is your best saviour in such a situation. But, what if you don’t have medical insurance? Will you let your loved one suffer at the cost of money? Obviously no! Thus, the only option left here is borrowing. Personal loans are good options in such a scenario, where you need urgent money to meet your requirements. The best part with a personal loan is they don’t require any collateral and provide you funds within hours.
To Consolidate Credit Card Debt
Credit cards are highly expensive and have double-digit interest rates associated with it. So, if one gets trapped in this debt, it becomes difficult for them to come out of it. This happens mostly in case, where the customer is using more than one card or when one is using the card recklessly. This is common with youngsters whose focus is to fulfil the current requirements without thinking about future repayment and interest. Personal loans, when used wisely, can be a great financial tool to get out of this trap. Consolidating your credit card debt could save thousands of money on interest charges. While transferring your card balances to a 0% interest credit card may be worth considering. Refinancing your credit card debt into a low-interest personal loan can be a smart financial move that can you a lot of money.
To Buy a Used Car
Buying a used car is best when you don’t want to spend much, it can be a good option when you want to save money. Though there are car loans available, you can only avail them when buying a new car. However, buying a used car can be easily financed by a personal loan.
This way you not only you get an affordable car but also repayments are made easy with a personal loan. You get a tenure period of 5 years and you can also go for a pre-payment, part payment whenever you have sufficient funds. Additionally, you’d again reap the benefit of an “unsecured” loan, meaning your car can’t be used as collateral or taken from you if you fail to repay the loan.
One more thing, which in your favour is- as you can be approved for a personal loan with funds transferred to your bank account before you even start car shopping, you have the powerful advantage to negotiating with a dealer as if you have cash in your hand which could save you thousands.
Many banks offer educational loans. However, the downside of these loans is the high-interest rate charged. Moreover, education loans are only provided to students who are selected and prestigious institutions. Also, there are times when an education loan is not enough to fund your relocation costs, living costs along with tuition fees. In such situations, personal loans can be availed to fund the entire educational cost or to fund the add-on costs.
India is always known for its big fat weddings. Here people spend a lot on the wedding ceremony, as for many it’s a matter of pride. For all this, everyone may not have enough money saved. In such cases borrowing the option left. Personal loans being unsecured and with no-end use, restrictions can be a good way to fund the wedding.
The Bottom Line
Personal loans can be helpful, given the correct conditions. A personal loan can be used for almost anything even beyond the options listed above. Hence, it becomes your responsibility to go for it only when the reason is unavoidable. Remember, for whatever reason you have taken the loan, it must be paid back eventually along with the imposed interest.