Personal loans are unsecured loans that are often at lower interest rate than credit cards. Being unsecured, personal loans do not come with the added collateral. They are given by banks solely on the basis of the individual credit history and repayment ability. Therefore, it is crucial that, you may maintain a good credit score and file taxes on time.
Personal loans are given to applicants without any scrutiny. So, these can be used for any purpose. Here are a few various scenarios where you might be able to use money from a personal loan.
Medical emergencies come up as first priority, and thus you need to be always prepared. These are times, when you don’t have required savings or assets to meet your medical expense. You can land in this position, if you don’t have a good medical insurance. Personal loans are a good source to produce liquid cash to meet medical expenditure, as personal loans don’t require any kind of collateral.
In market there are a numerous banks that offer educational loans. However, the downside of these loans is the high-interest rate charged for them. Banks also generally fund the education of the students for a specific and prestigious institutions. There are times, when education loans are not just to cover tuition, relocation charges, day to day living costs, etc. In such circumstances, personal loans will prove to be very useful. The personal loan amount can be used to cover all living costs, relocation costs, etc. Personal loans don’t require any collateral, and at very low interest rate.
In India, weddings are considered to be a prestige and honour issue, so big weddings are common. A lot of people spend huge amount of money on weddings. Big fat Indian weddings are considered to be a matter of their prestige. Not, everyone has enough money saved for this occasion. Personal loans are a good way to liquidize for your wedding, provided that you are getting a better interest rate. There are no wedding specific loans, thereby people use personal loan money to fund weddings, too.
Clearing a high-interest loan
Personal loan interest rate usually higher than other loans, but time can change everything. Interest rates differ from time to time. There are circumstances, where you have to take a loan at a high rate of interest because you had urgent requirement of the money. However, you can settle, earlier loan which has a higher interest rate, with that of a personal loan. The important highlight, being the interest rate difference. This makes meaningful only if, the personal loan has an interest rate is lower than the earlier loan.
Personal loans can be taken for some home renovation projects depending upon the interest rate. You can use this personal loan for repair or remodeling. Such a personal loan used for home improvement will be unsecured personal loan. The loan and the interest rate would be depended on the credit history and eligibility criteria.
The Bottom Line
There are times when we needs cash on an instant basis. Not everyone has the savings for being ready for such emergencies. Taking a personal loan can help, quite a lot. If you can smartly manage your assets.