When Availing Personal Loan is a Good Idea?
By Anupama Deshpande | November 27, 2019

Personal Loan is an unsecured loan which can be availed by a salaried or self-employed individual who is earning some minimum amount regularly. With any other type of loan, there is some mortgage required, for example, in case of a home loan, the house is a mortgage, in case of a car loan, car is a collateral, and the like. When it comes to a personal loan, no collateral is required. As fas as, interest rate on personal loan is concerned, it varies from bank to bank and person to person. It also depends upon personal credit score as to what interest you need to pay on your personal loan.

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It should be kept in mind that as the interest cost is comparatiely higher for getting a personal loan, it is not a good idea to avail a personal loan every time you need funds, even if you qualify for a personal loan. There are several other costs also which are linked with the personal loan such as processing fee, early pay-off penalties, etc. along with the higher interest costs.

You can use your personal loan for any of your personal or official needs and you do not have to disclose to the lender where you have utilized your fund however, it should be used for any legal purpose and not for speculative purposes. Now-a-days, personal loans are so easily available and quickly processed that people have started opting for them to meet any expenses.

Though it can be taken for any purpose but it is not good to get it in all circumstances. Following 3 situations are there when availing Personal Loan is a good idea:

There are times when there comes a requirement of funds to pay for some urgent medical emergency. On such occasions, making the payments through credit card is not advisable as it comprises heavy interest cost and hence one should look for a personal loan, in case you qualify for it as it will be available to you immediately with in hours and can be availed at lower interest rate as compared to credit card interest.

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Suppose, you have availed various loans at different times and at different interest rates and you are not finding them to be managed comfortably and also the overall interest outgo is higher than the same on personal loan, then you must apply for a personal loan so that you can consolidate such debts.

If you have a poor credit score or don't have any credit history, personal loan can be used to improve your credit score. In order to improve your credit score or CIBIL score, you can avail a personal loan and repay it on time in a disciplined manner, it will definitely improve your credit score in a short span of time with ease.

In India, Personal Loan is the type of loans which is applied for by majority of people. It is processed very quickly and very less number of documents are required by the lenders for this loan. Personal loan is very useful but you just need to look for it on right occasions and should not opt for it at all situations. One must weigh other options too before going for personal loan. One more important thing is that you should borrow only what you can actually afford to pay off easily. You can apply for personal loan online as well as offline.