Emergencies may strike anytime. Unexpected expenses may crop up and one may not have enough funds to meet those expenses. At such times borrowing money helps one to keep moving forward. A personal loan is an ideal choice in such circumstances. These loans are usually unsecured i.e you are not required to provide any collateral to get the loan. One has the flexibility of using the money for whatever purpose one wants. Besides, these loans are easily available. But that does not mean that it is the best choice for any circumstance. Here are 6 good enough reasons when one can depend on the personal loan.
To consolidate your debt
If you have multiple debts with different creditors at varying rate of interest, sometimes it becomes difficult to manage. Each debt has a different payment due date, because of which you may miss some unknowingly. A smart way to handle multiple payments is to consolidate the debts by taking a personal loan. You can use the loan amount to pay off all the previous debts. Now you will need to make only a single payment every month. If the previous debts were taken at a higher rate of interest than the rate at which you get a personal loan, then such action will help you save on interest costs as well.
Pay off credit card debts
Because of the unsecured nature of personal loans, the rate of interest on these loans is generally higher than other types of loans. But this interest rate is still lesser than what is charged by most credit card companies on the outstanding credit card balances. Hence a smart way to gain significant savings is to take a personal loan to payoff all credit card balances. However, this step will be beneficial only when you do not rack up more debt on your card. Since your credit limit will be freed up, do not give into the temptation of charging more expenses to the card. Otherwise this measure will do more harm than good.
It may not sound a good idea to dip into your emergency saving fund if your require funds to carry out renovation work in your home. A personal loan is a better solution for this purpose. The application process is very simple and the funds are disbursed within a week’s time. So if you want to fix a leaking roof, redo your kitchen, change your bathroom fittings, or paint the house and do not have funds available immediately, you can surely rely on a personal loan.
Improve credit score
If you have a low credit score, the best way to get it back in good shape is to take out a loan and repay it diligently. Regular on time payments help to build a strong credit profile. But when your score is low, you may not qualify for loans from leading financial institution. However many online lenders offer personal loans for CIBIL defaulters at a slightly higher rate of interest. One may seek out these loans and make timely payments to improve one’s credit score.
Whenever a medical emergency strikes, people often find themselves short of funds. Personal loan can be a saviour in such situations. They can be applied online and you can receive funds in a short period of time. For people who want to undergo a medical procedure but to not have sufficient money available can also use these loans to pay the bill, and then repay the loan in a structured way over a span of 3-4 years.
The best part about personal loans is that you can use the funds for whatever purpose you want. So if you need to buy an expensive item but cannot afford it right now, you can make use of the personal loan, and pay back the amount in equal monthly instalments that fit your budget.
A point to note is that the interest rate on this loan depends majorly on one’s credit score. So one must take care of one’s credit profile, in order to receive the loan at best rates.