One of the best benefits of taking a personal loan is that the amount can be used for any purpose. This gives a free hand to the intended borrowers who can then utilize the loan amount as per their requirement. It means that the amount sought for personal use can be utilized in any way the lender chooses to.
There are numerous reasons for which you may apply for a personal loan. Some of them are:
• Building credit history: Having a good credit score is essential to loan or credit card approval at lower interest rates. Repaying the amount borrowed from a financial institution irrespective of the nature of the loan or choice of the lender helps build credit. Many people prefer taking secured loans, thus, raising their percentage in the credit mix. However, your credit report will contain details of both secured and unsecured loans that you may have taken and repaid in the past, thus, necessitating a healthy mix of both.
• Debt consolidation: Paying off other loans and clearing credit card debt can cause a dent in your savings. The idea of tracking the repayment dates of all different kinds of liabilities can be scary. This prompts the idea of taking a personal loan that can be used to pay off all the lingering debt at one go and leaving you with only one loan to be repaid.
• Medical emergencies: Sudden health concerns may trigger unforeseen medical expenditure. Health insurance may be insufficient or lacking. Paying for medical expenses necessitate immediate arrangement of funds. This is possible by applying for an online personal loan or submitting a loan application to the lender’s nearest branch. Also, personal loans are unsecured, which means that you do not have to provide any collateral to secure the loan amount.
• Funding a new business idea: A novel business idea cannot succeed without necessary seed capital. If lack of funds has caused to back out from a pending business idea, then taking a personal loan can help. Switching on to entrepreneurship is possible with the timely disbursal of funds by lending institutions.
• Home remodelling: Affordable personal loan interest rates have made it possible to apply for funds necessary for home repair and refurbishing. Be it appending a new room or fixing the attic, restructuring the kitchen or revamping the house to lend it a modern look can now be done with a personal loan. Moreover, you can claim a tax deduction on the personal loan interest under the Income Tax Act.
• Vacation expenses: Postponing a long-awaited vacation due to lack of funds is now passé. You can take a personal loan to fund your trip, be it domestic or foreign. Though you may consider saving over a long period to fund your trip, using the personal loan amount is an easy and hassle-free option.
• Invest in your education: Seeking a higher education in foreign universities can cost a lot of money. Though students may opt for education loans, opting for a personal loan allows you to choose a higher amount to pay for tuition fees and added expenses other than paying for college fees alone.
• Paying off credit card debt: Credit cards are an extension of your cash in hand, thus, allowing you to make purchases of your choice even if you may not have the necessary money in hand. However, credit cards come at high-interest rates, which means that you incur a high debt if not repaid on time. Repaying credit card debt is now possible with a personal loan as the latter comes at much lower interest charges.
• Paying for gadgets: Love those flashy electronic devices or planning to gift yourself one? Though you may consider borrowing from your relatives, taking a personal loan to fund your love for costly gadgets sounds a better option.
• Meeting sudden Liquidity crunch: You may suddenly need money owing to any unforeseen reason. However, arranging for the much-needed cash at short notice may not be possible. With lenders ensuring quick approval and timely disbursal of the loan amount, writing a personal loan application sounds a reliable option.