Looking For a Personal Loan? Common Reasons to Opt for This Loan.
If you are in the personal loan market, the purpose for which you avail the loan can determine which lender can better work with you and what the rates that they can offer on your loan amount of any amount may it be a 5 lakh loan or 20 lakhs. Finding a lender that better aligns with loan life goals and loan purpose can bring about a major difference in the thorough experience.
So, why is it recommended to opt for a personal loan for meeting your distinct financial goals? Whether you have a requirement for a personal loan in Kerala or any other city, say Delhi, you can easily avail a personal loan with just a click on the selected site’s website. With the personal loan proceeds, you can use the same for anything from taking a long-term vacation to consolidating your massive debts. Continue reading to learn the major and important reasons to avail a personal loan and where you can find the same.
How Do Personal Loans Function?
A personal loan is usually an unsecured credit option, which is repaid in the form of monthly instalments along with interest constituents. As they are unsecured – this means you do not require putting your security or collateral to avail the loan proceeds. To provide you with the required loan proceeds, most lenders tend to look at your credibility to decide your loan eligibility and rate of interest.
You must even assess the loan purpose to decide whether you require borrowing and hold the potential to make the payments. Personal loan defaulting can have an excessively critical consequence on your score and repayment potential and can make it extremely challenging to avail of other kinds of credit options down the lane.
How Can You Determine If Your Personal Loan Is The Right Option For You?
Before You Avail A Personal Loan, Ensure To Ask Yourself The Listed Questions –
Why Do You Require A Loan?
While it might be tempting to avail a loan to buy holiday gifts or presents for your relatives and family or upgrade your desktop, a personal loan is a must-use option for funding your urgent expenditures. Ensure to ask yourself if you really require borrowing before placing an application for a personal loan.
What’s The Cost Of Taking Up Money Through A Personal Loan?
Make sure you add up all the overall borrowing costs, which must include all the associated fees and rates of interest before making the final decision. Compare distinct loan types to make sure you are getting the lowest interest rate possible.
Can I Manage More Debt?
In case you are already struggling and unable to meet your expenses and pay down your present debts, opting for a personal loan may make the matter extremely bad, unless you are using the same to consolidate your existing debts. In case you feel like you are already debt trapped, consider looking out for an additional source of income or using the government help programs in place of borrowing funds.
Can You Afford The Monthly Repayments?
You must always ensure to consider your potential to repay your loan, which means computing your monthly repayments and factoring the same into your budget. Use the online personal loan calculator to better estimate your monthly repayments before committing to a personal loan.
While a personal loan may act as a financial lifeboat in specific scenarios, it is not always a prudent experience. Mentioned here are some of the important reasons for which you may consider opting for a personal loan –
Consolidate Your Debt
Debt consolidation is one of the common reasons for you to borrow a personal loan. As per the study by LendingTree, debt consolidation was a highly popular reason to place an application for a personal loan among consumers with good credit. Debt consolidation includes rolling multiple debts into one personal loan. This specific approach can make total sense if you are able to get a low rate of interest. If you make repayment of other debts with money from a personal loan, you will just have a fixed monthly repayment and you may be able to save some money on your interest constituent too.
A Personal Loan To Consolidate Your Debt Can Even Assist You –
- Reduce your monthly payments
- Extend your repayment tenure
- Free up more expenses from your income to meet your required expenses
Cover Exigency Expenses –
While it is prudent to form an exigency fund to cover up your unanticipated expenditures, an exigency personal loan can assist if you are not yet prepared. A few of the emergency situations that you may face are –
- Job loss
- Healthcare bills
Home Improvement Plan –
If you want to renovate your home, you may consider opting for a personal loan to assist you to cover your home improvement expenditures. Ameliorating your home can assist keep the cost of your home intact. You may take up a personal loan to improve big-ticket projects like finishing your basement, renovating your kitchen, or flooring your home. You may even tend to resolve problems that may need instant attention like a broken air conditioning system, heater, gas leak or blocked pipe.
In such cases, a personal loan can assist you to pay for repairs over the time period, and you can repay the same borrowed funds along with interest within 1 – 5 years.
Cover Up Moving Expenses –
You may even opt for a personal loan to cover up your moving expenses. There are various scenarios wherein you may consider moving to some other location. Majorly it is the transfer of your job or job change or it may even be when you have bought your own home in the location of your choice and want to shift to your own home from a rented apartment.
Does The Purpose To Avail A Loan Matter?
Yes, of course, it matters because when you avail a loan, you do not enhance your overall liquidity. A personal loan comes with an interest rate of anywhere between 10 per cent per annum and 24 per cent per annum, which you must repay within a span of between 1 and 5 or 6 years. So, you are expected to use the borrowed funds to meet your immediate requirements and not unnecessarily opt for a higher proceed of loan, which you do not require as doing so unnecessarily enhances your overall loan cost too.