Many customers are now taking personal loans to finance their big-ticket purchases. Personal loan is the best option for households to meet financial exigencies they experience in buying a house or a car, children’s higher education, small home renovation works, or even in cases of medical contingencies.
What is a personal loan?
Personal Loan is a short to medium term unsecured loan taken by consumers from a bank or a non-banking financial company (NBFC) to fulfill their unexpected personal requirements or for debt consolidation. You are not required to pledge any asset as collateral. These loans are issued on the basis of key criteria such as income level, credit history, repayment capacity etc. Each individual’s credit history and financial status will influence the interest rates of a personal loan offered.
5 Reasons why you may choose to get a personal loan
1. Debt consolidation
It is a difficult task to handle different amounts of debt with various creditors. Each debt will have its own due date, interest rate and method of payment. Because of multiple debts, you might miss payments and end up paying more interest over time due to higher interest rates. Personal loan will combine multiple debts into a single, larger piece of debt. Interest rates applicable on a personal loan (12%-15% per annum) are much lower than that on credit cards (2.5% to 3% per month). Therefore, it makes sense to pay off all your credit card debts by availing a personal loan. You can also choose to pay off various creditors by using a personal loan and make a single consolidated monthly payment. To put it in a nutshell, debt consolidation will help you save time and money, and is arguably the best reason for taking out a personal loan.
2. It helps with unplanned expenses
We cannot plan all expenses in advance and unexpected financial crisis can hit anyone irrespective of her or his financial status. Personal loans can help overcome such financial difficulties. Therefore, it will be a prudent decision to take a personal loan for these unexpected expenses rather than dipping into your savings. When you obtain a personal loan to cover these expenses, you help build your credit score and protect your financial nest egg.
3. Home renovation
We hardly ever budget for home improvement, although homes require recurrent remoulding. You may have to upgrade your kitchen, make bathroom renovations, add a swimming pool, or put a new roof etc. at some point of time. Personal loan will be a perfect solution for carrying out home renovation projects.
4. Big-ticket purchase
Personal loan can also be a good consideration for major purchases like latest electronic gadgets, home appliances and many more for which you have not allocated funds in advance.
We all need a break from our stressful job or lifestyle, but our income and savings may be insufficient to fulfill that holiday dream. A personal loan can be a wise choice to finance your solo or family trip, and you can pay it off over a period of time.
For more information, you can go over to personal loan page on Afinoz Personal Loan