5 Situations When You Need A Personal Loan

Posted by Rupee Redee on March 17th, 2020

A personal loan, to be simply put, refers to an unsecured loan taken by an individual from a bank or even an NBFC—Non-Banking Financial Company—in order to meet their personal needs. Such loans are provided on the basis of the level of income, history of employment and credit, the extent of repayment, and so on.

Unlike the guarantee of being secured against an asset that comes with a home, a car, or a gold loan, a personal loan is unsecured. The borrowing individual does not offer collateral items such as gold or any such asset as a mortgage in order to avail of the loan. In case a default occurs, the lender, therefore, does not auction anything owned by the borrower. As there is a greater risk perceived while sanctioning a personal loan, the rate of interest on them tends to be higher than those on home, car, or gold loans.

Nonetheless, a personal loan can be a viable option for the borrower during times of extreme need. Below are a variety of situations that may call for availing a personal loan.

• Home Renovation: Contrary to popular belief, taking the help of a personal loan to renovate your home and make repairs can actually help you in saving your money. This is mainly because essential repairs in your home can help increase its value in the long run, thereby increasing its net worth helping you get a promising deal if you ever become interested in selling or renting your house. Whether you are interested in replacing your roof, installing solar panels, or even remodeling your kitchen, personal loans can be viable when it comes to home renovation.

• Wedding Expenses: Any large event—such as a wedding—calls for personal loans that might help you save a considerable amount on interest charges. Easy personal loans can cover big-scale expenses, such as paying for the venue and the bride’s dress and jewelry, as well as smaller items like decoration, photography, food, and so on. Similarly, in the case of funerals, several big and small-scale expenses can be covered with the help of a personal loan.

• Travel Expenses: An average vacation might not be expensive enough to call for availing of a personal loan, but vacations such as a honeymoon or a luxury cruise can cost more than an individual can afford at a time. In such circumstances, taking a personal loan can help immensely in financing your dream vacation. Personal loans in Bangalore, for instance, are quick, paperless, hassle-free, and convenient in covering such expenditures.

• Education: Not all lenders allow personal loans to be utilized in paying for higher education, but many do. Be it caution deposits, tuition fees, or unexpected college costs that may suddenly sneak up on the student, candidates from a wide range of streams can apply for these personal loans, which cover all expenses related to their course. In addition to affordable student loan services, many banks provide further concession on the interest rate, which proves to be very beneficial for students.

• Medical Emergencies: Health disasters can strike when least expected, and, more often than not, the person in need does not have the required cash in hand. Medical Emergencies, thereby, become a significant reason for borrowers to take personal loans. Adjunctive expenses such as medications, parking costs, medical travels, as well as aftercare can also be financed by a personal loan easily and effectively.

Consequently, personal loans can be utilized for a wide range of activities. This financial resource is an efficient way to consolidate debt and make necessary purchases but should always be utilized in a responsible manner.