5 reasons to take up personal loans

Posted by neha sharma on April 18th, 2019

Money plays a huge role in shaping our lives. They have the potential to turn our dreams into reality. However, there is one hurdle that stops us from nearing our goals – the financial setback. Lack of funds can be detrimental on several occasions. Nevertheless, there are many avenues by which you can secure your dreams. One such solution is a personal loan.

What is a personal loan?

Simply put, a personal loan is an unsecured loan that requires no collateral as security. These can be taken from banks or non-banking financial companies (NBFC). Personal loans are available with much ease and provide flexible options. They offer immediate financial relief as well.

What are the personal loan eligibility criteria?

Those who take up personal loans need to fulfil conditions based on income level, repayment capacity, employment history, etc. The criterions are as follows:

1)      Age: You should fall between the age group of 21-60 years

2)      Income: To avail a personal loan, you should earn a minimum salary of 20,000. This is applicable for salaried employees. If you are self-employed, you should be drawing at least INR 2 lakh per annum 

3)      Employment stability: You should have been in your current business or organisation for at least 3 years

4)      Credit score: Your rating plays a crucial role to determine if you can pay back the loan on time. You must have a rating anywhere around 650-700

Although personal loans are taken to fund your requirements, there are times people use it for impractical events. It is imperative to know when to avail of a personal loan:

1)      Holiday: Lengthy working hours, stressful work environment, improper eating habits, are some factors that contribute to our health problems. To counterbalance all this, a vacation is an ideal solution. If you cannot afford the expenses of the holiday entirely, you can always take up a personal loan for the same. Banks do not back out from offering loans for such reasons, provided you have your trip documents in place.

2)      Wedding: A wedding calls for expenses that could leave a hole in your pocket. Considering weddings are a one-time affair, people do not hesitate in spending lavishly. Indian weddings involve several ceremonies, and that adds on to your budget. In such scenarios, you can opt for a personal loan. These loans are generally quick in nature and ensure the wedding takes place smoothly.

3)      Clear existing debts: There are times we need loans to meet some of the other financial emergencies. That leads to multiple investments in our name. It is better to clear them off with one single loan, i.e. a personal loan. Most banks do not refuse to sanction personal loans to clear existing debts.

4)      Health: Let’s be honest, medical emergencies are erratic. The cost of healthcare is too much to handle. Health insurance could bail us out for that moment, but additional expenses could emerge. At such times, a personal loan comes to the rescue. It offers some amount of relief and is an extremely viable option due to its immediate processing. 

5)      Home renovation: No house is complete if it does not give you a homely feeling. We always want the best amenities for our home. Whenever you want to make some changes to your home or purchase new equipment, a personal loan acts like your best ally.

Regardless of the reason, a personal loan should be treated with respect as it always provides us with relief from a significant burden.