A personal loan can assist you in meeting any legitimate monetary needs. You may have seen this loan product advertised by several financial institutions as a travel loan, medical emergency loan, and so on.
However, all of these loan products operate in the same way, and their eligibility and documentation requirements are also the same. Here are the seven best ways to use this loan product.
Table of Contents
1. Home Renovation
You might want to modernise your home for any festive occasion or major event such as a wedding. Changing the colour of your walls, replacing old furniture, and decorating your sitting room with modern art or sculpture should all be on your bucket list.
However, all of these things may put a dent in your budget if you plan to achieve them with your monthly income or savings. In this case, nothing beats the advantages of obtaining funds at a low personal loan interest rate.
2. Vehicle Purchase
You will find numerous loan products available on the market that can help you finance a new vehicle. For example, in case you want to buy a new car, you can apply for a car loan. Similarly, a two-wheeler loan can assist you in purchasing your dream bike.
But did you know that each of these product-specific loans has one major disadvantage? You will have to put down 20-30% of the total vehicle amount. It means that if you want to buy a car worth Rs 5,00,000, the lender may require a down payment of Rs 1,50,000.
Though, this is not the case with a personal loan. This loan product allows you to purchase any vehicle without having to worry about a down payment. Simply ensure that you have all of the personal loan documents required by the lender on hand.
3. Wedding Planning
If you are getting married and intend to throw a lavish party, you should first check your bank account. A wedding necessitates investment in a variety of areas. You must budget for the purchase of jewellery, designer gowns, catering, lighting, and many other pre-wedding rituals.
If you are not aware of these costs, continue reading. A wedding banquet will cost you between Rs 5,00,000 and Rs 10,00,000. Catering will cost between Rs 800 and Rs 1200 per plate. You should also set aside Rs 5,00,000 to Rs 7,00,000 for jewellery purchases.
In this case, a personal loan may not completely alleviate your financial burden, but it does provide some relief.
4. Higher Education
If you have children, you must be aware of educational inflation. The cost of higher education has only risen over time. Degrees such as MBA, MBBS, and B.Tech, which were once completed for a few thousand rupees, now cost lakhs. You may find it difficult to pay this expense if you do not plan ahead of time for such expenses, such as if you do not have any education-related investments.
Affordably priced funds at a lower personal loan interest rate can be extremely beneficial in this situation.
5. Medical Emergency
A medical emergency is a terrifying situation. You never know whether the funds in your emergency reserve are sufficient to deal with the crisis. Nowadays, the majority of financially skilled people have health insurance for themselves and their family members.
However, insurance cannot always assist you. For example, suppose you recently purchased insurance with a two-year waiting period for critical illness. However, you become ill before the duration is up.
In this case, your only option is to apply for a loan. If you have all of the personal loan documents required by your lender, the funds will be approved within minutes.
6. Debt Consolidation
Well, have you ever found yourself in a debt trap? If so, what method did you use to get out of that situation? Have you sold your valuables to repay your debt? Or have you tried anything else? The best option in this situation is to apply for a low-interest personal loan and consolidate all your costly debt under one umbrella and repay them in one go.
For example, if you are eligible for a Rs 5,00,000 personal loan and have Rs 50,000 in unpaid credit card bills, Rs 4,00,000 in high-interest business debt, and Rs 50,000 in skipped EMI for a car loan from the previous month, you can use the personal loan to consolidate your debt.
7. Building Credit History
If you intend to apply for a large loan, such as a loan against property or a home loan, you must first improve your credit history. But how would you go about doing this if you haven’t been approved for your first credit? We recommend applying for a short-term consumer durable loan and then immediately getting a small personal loan. Make sure you pay your EMIs on time, as this will significantly help you build your credit report.
To Conclude
You can apply for this loan whenever you are in financial trouble. Before submitting your loan application, make sure you meet the minimum eligibility requirements and have all of the personal loan documents required by the lender on hand.