When Is It Right To Apply For Personal Loans?

Loan as an instrument is useful in different scenarios. Some loans are defined for a particular purpose. Auto loans, for example, is to buy a two-wheeler, four-wheelers, etc. Housing loans are for purchasing a home while a student loan is for those who have insufficient funds to pursue their education and more.

A personal loan is generic. You can do about anything with the same, as long as it is legal. Some lenders, however, do want to know what you will do with the loan money, but it is more of a best practice on their end.

An instant personal loan is now possible with mobile banking apps. You need to fill out enquiry forms, and the bank representatives usually take care of the rest.

Following are some circumstances where you benefit from apply for personal loan:

  1. Refinance student loans– If your student loan interest rates are higher, then you can use an online personal loan, after cross-comparing interest rates. However, one must remember that student loans often come with a tax advantage, and while refinancing.
  2. Credit Card– An instant loan makes sense if you have maxed out more than one of your credit cards. Paying multiple EMIs would land you in a pool of high-interest rates. With personal loans, you can consolidate your debts, and look for a price that is lower than your credit cards.
  3. Improve credit score– A personal loan helps your score in many ways. If your credit report portrays credit card debts, then apply for a personal loan to bring that ‘account mix’ in the picture. Secondly, it reduces your credit utilisation score i.e. the amount of credit you end up using eventually.
  4. Finance purchases– Any significant expense like purchasing a home or car, which you generally cannot afford splurging for all at once, would be easier to achieve with a personal loan. However, before you apply for online loans, compare the interest rates with that of the individual loan rates (like a mortgage loan for homes). Sometimes, it is better to ask the seller for a quote or offer on your purchase and compare that with your loan proposals.
  5. Wedding planning– One of the biggest expenses in India, which is weddings, are often easier with a personal loan. Make sure you compare the interest rates and go through numerous proposals before picking one.

Bottom line is you can make any considerable expense with a personal loan. You need to consult an expert when it comes to picking a mortgage, compare interest rates and understand the EMI structure. And as long as you are thinking personal loan, apply online to avoid all the hassles of paperwork and unnecessary bank queues.

Personal loans can take the pressure off in ways one cannot even imagine, we only need to find those!

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