Personal loans are unsecured loans that can be a helpful means to obtain extra cash when you need it the most. If you face any emergency, you might not have the required money to deal with it. If you’re planning for higher studies abroad or in a big private university, you may want a little more money to finance it. In such instances and many others, personal loans can become the best, fast and easy choice.
We’ve prepared a list of ways in which personal loans can be useful to you.
Crisis Support
Accidents happen, and when they come, they come without any prior warning. A crisis like medical emergencies cannot be postponed and therefore have to be dealt with as early as possible.
Thus, personal loans can come to your rescue in such a case without any collateral requirement. So even if you are in some other city, you can still avail this loan without having to worry about collateral. <a Oriental Bank Of Commerce Personal Loan, SBI personal loans, etc. are a few good loan products you may go for.
A personal loan can help you protect your savings account from draining in such uncertain times.
Consolidate Debts
If you have other debts to pay like a credit card debt, and their interest is getting piled up month by month, and you are unable to keep a track of different loans you got. In such a situation, you can consolidate all your small debts into one debt, and pay that off using a personal loan. Since a Personal Loan Interest Rate is much lower than a credit card's interest rate.
This way, you don't have to manage multiple small debts and only have one but bigger debt to repay.
Besides this, personal loans also have lower interest rates than most credit cards. Therefore, if you pay your credit card using a personal loan you would save a lot on the interest you would have paid on those cards as the interest you would be paid on a personal loan would be much lower than the card.
Finance your Family Trip
There's so much in this world to explore then why wait when you have the support of personal loans? Since personal loans don't require you to have a specific reason for availing, you can use them for your vacations, trips as well.
Fixed payment schedules
Once you get your loan, the period and interest rate are fixed. Having fixed money to pay makes it a lot easier and manageable to plan your finances.
If you compare it to credit cards, where you have a floating monthly payment that relies on how much you spend, personal loan payments are much more stable as it keeps you within your monthly budget constraints.
Flexibility in usage,
Flexibility is one of the most advantageous aspects of a personal loan. Personal loans can be spent on anything you prefer. The lack of limitation gives borrowers the independence to use the money however they desire – whether to start a business, financing holidays, or consolidating debt.
Build your CIBIL score
If you maintain a credit score or are planning to start building one, personal loans can help you in building multiple facets of your credit score, involving your credit mix. It means the types of loan you have taken so far, the length of your credit history, and your credit utilization ratio. When you first apply for a personal loan, your credit score may temporarily drop. However, as you pay back the installments on time every month, your credit score will surge.
If you don’t already have a good credit score, you may not be able to take out a personal loan with a reasonable interest rate. High interest and other charges can put you into a situation where you might not be able to pay back the loan, overall damaging your credit score.
Take Note
Remember that if you are not able to pay your monthly EMI payments, your credit score will plunge, hindering your initial goals.
In today's era, there are countless ways in which you can fulfill your dreams and needs. Personal Loans are one of them. However, it's equally important to understand the liability you will hold after availing of a loan plus the terms and conditions relating to it so you don't have to regret it later on.
Also read this: Personal Loan VS Gold Loan