Personal loan is a collateral-free loan that can be used for any purpose. If you want to buy furniture or go on a vacation with your family or buy expensive gifts for loved ones, you can use personal loan for virtually any purpose. But have you ever thought when it is a best time to take a personal loan? Let’s understand the scenarios when you can make the best use of personal loan.
1. To finance home improvement:
Taking a personal loan is a much better idea than taking a home loan. How? It is a good way when it comes to financing your home renovation without putting your home as collateral. Another plus point is that the tenure is less so you don’t have to take the burden for long.
2. To repay Loan with Higher Interest Rate:
If you have an existing loan that has a higher interest rate, taking a personal loan to repay it is a good idea. If you have a credit card loan outstanding with an interest rate of 24-36% per month, taking a personal loan with interest rate in the range of 10-18%, will be a prudent thing to do. This way you can reduce your interest outgo substantially.
Also Read: 4 Quick Ways to Get Lower Interest Rates on Your Personal Loan
3. To deal with a medical emergency:
During a medical emergency, you need money instantly and personal loan can come to your rescue as the loan processing is fast and the documentation required is less. In fact you can do the comparison online in few minutes on Paisabazaar.com, and avail the loan at lowest interest rates. Also, some of the banks disburse loan amount almost instantly to existing customers.
4. To go for higher education:
If you are planning to opt for higher studies either in India or abroad, taking a personal loan is a good decision. The loan has no restriction and apart from paying the education fees, it can also be used for other purposes like accommodation, daily expense, etc.
5. To improve your credit score:
Credit score plays an important role if you take a loan in future. It is essential to have a good credit score and the simple trick is to take a small personal loan and pay it off on or before time. This way, the lender will be able to see a good credit history and you can easily borrow a big loan amount in the future.
Also Read: 10 best ways to improve your CIBIL score for getting instant loan
Check Your Free Credit Score to know personal loan eligibility Check Now
6. To get married:
Weddings are an expensive affair and so are the dreamy honeymoons. You don’t need to spend all your savings or go through the embarrassment of asking money from your friends or relatives, rather you can take a personal loan to finance your wedding and vacation.
7. To go for a vacation:
Do you want a break from long working hours and hustle and bustle of city life but don’t have enough money to go for a vacation? Don’t delay your plan any further because a personal loan can finance your dream vacation. If you have a good credit score, you will easily get the loan and can repay it with monthly EMIs.
Whatever your reason may be, taking a personal loan is a responsible decision and should not be taken lightly or mistreated. Always remember to borrow as per your repayment capacity and use the money wisely.
Also read: Top 10 Mistakes To Avoid While Taking Personal Loan
Your post was really educational. I like that idea of doing a little personal finance audit before searching for a loan. That seems like a great way to ensure you’ll run into fewer problems on your hunt for a good loan rate.
I spent a lot of time to locate something such as this