We list the situations where a personal loan can help you achieve your dreams easily and with minimum fuss – and why availing it is an easy and sensible option.
Earlier generations of Indians were averse to the idea of borrowing money for personal reasons. They believed that one must live within their means, and that borrowing money is a sign of bad fiscal discipline.
However, rising living costs and competing expenses make it impossible to rely only on one’s income. There are a variety of expenses – children’s education, household maintenance, utility bills, groceries, travel and communication, etc. People also make use of investments to generate periodic income, but even this may not be enough.
Thus, there is sometimes no option but to borrow money from friends and relatives. But apart from the embarrassment of doing so, there is always the constant pinch one experiences when it comes to repaying the money on time. Instead, it is a far better option to apply for a personal loan. A personal loan helps to finance a variety of dreams by making a large fund of money available in a short space of time. If the loan applicant has a stable source of income, they may even have a pre-approved personal loan waiting for them.
Here are just 5 of the many dreams one can finance after applying for a personal loan:
1 To start a business. Most people dream of starting their own business, but they are flummoxed by the sums of money involved in commencing operations. One may not have the necessary resources at hand right away. But if one has a regular source of income, one may avail of a personal loan to get a large sum of money quickly and with minimum paperwork. The best banks today offer attractive personal loan products at a good rate of interest, so one can easily take the loan and embark on their dream of starting a business.
2 To make a down payment for a house or car. If you dream of owning your own house or buying that swanky new car that zipped past you on the street, you are not alone! It is natural to want to acquire a new dream home or a new car, but if you don’t have the funds at your disposal you might have to postpone the dream for a bit more. Instead of dipping into your savings, you can apply for a personal loan and finance that important dream right away.
3 To pay off a loan. Many of us have several loans to our name. Not only are these additional liabilities to grapple with every month, they also erode our income. The most expensive are credit card loans, which also ruin the credit history of the borrower. However, a good idea is to close an unpaid loan such as a home loan or a credit card loan. At the same time, taking a personal loan diversifies the loan portfolio.
4 To generate money quickly. Many of us grapple with the problem of dwindling finances and high living costs. Thus, there are times when each person requires money in an emergency. An emergency may be of any time, medical, personal or financial. Thus, taking a personal loan is a good way to generate money quickly.
5 To pay for children’s education.Education costs in India are on an upswing every year. It becomes more and more difficult to pay for higher education as each year passes – but there is no alternative, either! Your child may profess a desire to go abroad for studies, or start a small home-based business, or even take a gap year and travel to a foreign country. All of these objectives can be financed with a personal loan.
There are many more uses of the loan that you can consider. Be sure to consult with a financial planner and your bank before applying for the personal loan.
How to apply for a personal loan
Scout for the best loan products and the lowest rate of interest across banks and financial institutions. Approach your own bank first – they may have a pre-approved personal loan in your name and may even be open to negotiation on the interest rate.
Use a personal loan eligibility calculator. Enter the details asked about your age, credit history, loan requirement, tenure and income. The calculator then computes the figures basis the information provided, and comes up with the loan amount you can get basis all of these factors. The computation gives you an idea of how much loan amount you can get, and the EMIs payable therein. Thus, you can rejig your finances and find out if you can afford the monthly outgo, or if you should opt for a smaller loan amount.
Having a good credit score is crucial to the loan application process. Your credit score might be muddied by past loan defaults, too many existing loans and even an erratic income. Make sure to clean up your credit history before you make the loan application.
It is possible to transfer the personal loan at a later date, to another bank. Many people are not aware of the modalities involved in this. Start by finding out if the bank you are borrowing from is amenable to such a transfer.
Also find out the processing charges for the loan, as well as such charges like stamp duty and registration (for the loan agreement), legal and evaluation fees, personal scrutiny fees, loan application fees, etc. If you have a good relationship with your bank, you can even negotiate these charges or ask for a waiver on some of them.