When to Choose a Personal Loan

When to Choose a Personal Loan

A personal loan is a borrowing made from a bank or financial lender to finance a personal need. Unlike education loan that has strict parameters and scrutinises the application and eligibility on the basis of the ranking of the University you are attending or your track record as a student, a personal loan comes with minimal frills. Unlike a home loan that would require you to furnish reams of paperwork, collateral and security, personal loans can be unsecured as well. 

One of the deciding factors of securing funds, therefore, boils down to whether you can provide a collateral. Because if you can furnish mortgage, then it is likely that you will have far more options of securing credit and funds than you would if you were not willing or capable of furnishing the same. Usually, one of the foremost advantages of personal loans is that they are unsecured and do not demand any collateral.

Therefore, you will find that going for a personal loan is a smarter move under certain circumstances.

Know when to choose a Personal Loan

It is important that you assess your situation with respect to the funding options available, particularly to see if a personal loan can fulfil those requirements. Let’s have a look at certain cases wherein choosing a personal loan can prove to be a financially prudent decision.

• When You Have Multiple Debts to Consolidate

If you already have a number of debts hanging over you like a sword and you find yourself asking ‘why personal loans’, then you will find your answer in the concept of debt consolidation.

The practice of debt consolidation is a debt refinancing strategy that encompasses borrowing one loan in order to pay off all the other loans and credits. If you are able to get a personal loan with favourable and kinder terms and/or at a rate of interest lower than what you are paying under your current debt arrangement. The best and the most obvious part about debt consolidation is that it eliminates the hassle of keeping a record and track of a plethora of borrowings and replaces your loan burden with a single EMI. Debt consolidation makes for a very compelling reason for you to opt for a personal loan. You can finance your current pending repayments with a personal loan from Bajaj Markets and repay it on favourable terms. Loan amounts up to Rs 25 lakh can be availed and the repayment tenures can last anywhere between 12 to 60 months. With that kind of flexibility, it is hard to not consider this option!

In fact, the exercise of debt consolidation can even have a positive impact on your credit score in the long run since you will be able to handle your payments more efficiently.

• If You Need Funds For Home Improvement

Another popular reason people opt for personal loans is when they need funds for home improvement, refurbishment or renovation, by whatever term they refer to it. Here’s the thing: when you are investing in your home improvement, the expenses are usually heavy and bearing the brunt of them upfront can be disturbing to your short-term financial stability. Thus, people often find it practical to opt for a personal loan that can be availed sans any collateral. This way, you don’t have to put a strain on your monthly budgets or income, nor is there any need for sucking crucial funds from your rainy day savings. Renovation can be stressful as it is, a personal loan can ease the financial struggle at least! And the best part is you will not need to even pledge your home as an asset in order to get the money. There is absolutely no need for furnishing collateral in case of a personal loan.

• To Finance High-End Marriage Expenses

So many brides and grooms look forward to their wedding day as a grand celebration. The paucity of funds shouldn’t take away from the sheer grandeur of such a day! You are tying the knot and it is a once-in-a-lifetime event. No stone should be left unturned to make every bit, from decorations to attire and venues the best. Of course, the expenses can be mind-numbing. Who wouldn’t want to spread the stress over a longer time period?

This is why personal loans can be useful! Whether it is top-notch catering or high-end wedding planners that you want to hire - with personal loans you can easily finance your dream wedding!

• When You Plan To Travel Abroad

Travelling abroad is an exciting prospect! After all, who doesn’t like the idea of hiking around the Swiss Alps or live in the Scottish countryside? Or for that matter, shop in the busy and bustling streets of Bangkok! Or attend a music festival in Amsterdam? It is every bit as fun as it sounds. But all of this comes at a price. In fact, travelling abroad - whether for fun, recreation, or work - entails a lot more expenses than just your accommodation and flights. There are reams of paperwork for VISA and other applications. You also need to secure travel insurance. And then there’s a need to keep a separate budget for shopping for souvenirs! You could go on a skydiving or hiking adventure. Even a simple sightseeing tour will incur some costs. While all of these experiences are worth every penny spent on them, it is also important to provide for such activities in advance. Therefore, the advantages of personal loan extend to a fun vacation. It is often easier to repay smaller amounts than it is to hoard savings for your vacation. Besides, a personal loan can give you some financial discipline or else you could splurge without measure!

Conclusion

Why get a personal loan? A personal loan can add variety to your debt portfolio and therefore, help you improve your credit score.

And from the above examples, it is clear that a personal loan can be a useful instrument in your hands to make a safe financial plan and better manage expenses. These expenses can otherwise look gigantic but a personal loan can help you to comfortably navigate such events in life that can otherwise prove to be detrimental to your bank balance. The advantage of personal loans is that they can allay financial hardships and bring financial discipline to your spending!