4 Things You Can Use Your Personal Loan for in 2022
A personal loan is a kind of instalment loan that disburses a predetermined sum of money to you all at once. Most personal loans can be obtained without putting up any security. The length of the repayment period can range from one to ten years. Although some lenders may limit their use, these loans could be used for almost anything. Personal loan interest rates are set, so they won’t fluctuate as you pay off your loan.
Most people look for lenders that provide personal loans with lower interest rates. You can also negotiate the interest rates. This blog will discuss four ways to use a personal loan. But first, let us define its different types.
Types of Personal Loans in India
Let’s take a look at the types of best personal loans in India:
- Wedding loans
- Travel loans
- Home renovation loans
- Medical loans
- Used car loans
- Debt consolidation loans
- Higher education loans
You can consider taking these different types of personal loans as per your needs.
Steps to Apply for a Quick Personal Loan
Before applying for a personal loan, go hands-on with the lender’s eligibility criteria.
Eligibility Criteria
To avoid any hassles in the future, always confirm that you are eligible for a loan before applying for it. Your eligibility for a loan depends on many things, such as your age, monthly salary, type of job, etc.
The following general specifications and guidelines are provided:
- Age restriction: 21–68 years.
- Employment type: Working as a homemaker, businessperson, self-employed professional, retiree, or salaried
- Status for Employment: Working or owning a business for at least two to five years.
- You must be earning at least Rs. 5,000 per month, have 1 to 3 years of work experience and have a credit score of 750 or higher.
- Maximum EMI: 65% of income or less.
With the help of technology, you can apply for personal loans online. The steps are simple and easy to follow.
- Log in to your lender’s online forum.
- Click on the Apply button at the top of the page.
- Update your KYC and authenticate it with an OTP.
- Input the loan amount and time you need to pay off the instalments.
- Add the monthly instalment amount you would like to repay.
- Sign up for the final loan agreement.
- Submit the required paperwork along with the application form.
After you complete all these steps, the lender will take time to approve your loan. All submitted documents will be verified. Once done, the lender will put the money in the respective account.
Four Vital Things for Which You Can Use a Personal Loan
- Medical Emergencies
Emergencies are always sudden and unexpected. This was especially true during the COVID-19 pandemic. You can always apply for an instant personal loan in India for medical emergencies.
Despite having medical insurance for such situations, you may require more than the insurance amount. This is where a personal loan to cover hospital expenses comes in.
- Debt Consolidation
Debt consolidation is one of the most common reasons people choose to take a personal loan. Suppose you borrow an amount to cover the instalments of other loans and credit card bills. Clearing up all your debt with one single loan is a good idea. Maintaining a simple instalment plan for a personal loan is a lot easier.
Moreover, using a personal loan to pay off all debt can help save on interest. You can pay more for the EMI if you continue to handle multiple other loans in the same tenure. So, try consolidating the debt amount as much as you can.
- Vehicle Financing
A vehicle loan is one of the most preferred personal loan forms. If you are not purchasing a car directly from an automobile manufacturer, this is an option to consider. For instance, if you are willing to pay for a used vehicle, a personal loan can be helpful. Instead of using emergency savings to buy a car, a personal loan works better.
- Higher Education
Education is a vital factor that encourages people to apply for personal loans. Choosing to study abroad for better opportunities requires extra finance. This reason suggests that individuals need an additional amount to complete their degrees. A personal loan for education helps cover the expenses.
When Not to Choose a Personal Loan
It would be beneficial if you were aware of when you should not choose a personal loan. Here are a few considerations to help you make a final call:
- Only take out a personal loan if your credit score is good. Different lenders have a varied set of credit score requirements. The adverse effect of having a low credit score is that it can increase the interest rate.
- Secondly, only take a personal loan if you can repay the monthly instalments. Despite this, your credit score will decrease if you choose to take a personal loan and need help repaying it on a timely basis. Furthermore, there is a chance that you will no longer be eligible for any loan.
- Choose a personal loan only if you are not eligible for a better option. It’s because a loan is, first and foremost, a sum you must repay. So consider a personal loan only if you make money and have a high credit score.
Conclusion
Personal loans are easy to get. They can also be used for a wide range of reasons. Make a plan for how you’ll use the money and pay it back with interest before accepting a personal loan offer. Compare the benefits and drawbacks of getting a personal loan versus another type of financing.
You can choose a personal loan for any of your needs. But before that, get quotes from various lenders. Also, compare the different interest rates and lending rates. After weighing all the information, determine whether a personal loan’s advantages outweigh its disadvantages before committing.
Check out similar blogs at Piramal Finance, your ideal financial services company. It offers the best terms and conditions for personal loans in 2022. Take advantage of them! Share the blog if you find it useful.