10 Reasons to Apply for a Personal Loan

Updated on: 22 Jan 2024 // 5 min read // Personal Loans
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Personal loans are fast becoming popular, and there are a wide variety of reasons behind the same! For what they’re worth, they have become our new-age friends in need. In the past, people preferred financing their needs by using their savings, swiping their Credit Card or borrowing from relatives or friends. However, they have now started to consider taking a Personal Loan to finance their big-ticket expenses.

The best part about Personal Loans is that they don’t need to be backed by collateral unlike in other forms of financing. They also cost less than taking cash advance loans or using credit cards.

There are numerous reasons for which an individual avails a personal loan. An individual may get a personal loan to build their dream house, repair their home or vehicle, pay off unexpected expenses or make a special purchase. Let’s discuss the reasons in detail for taking a Personal Loan.

1. Paying off Credit Card Dues

Debt consolidation is one of the most common reasons to get a Personal Loan. Contrary to popular belief, it can be rather risky if you continue running up expenses on Credit Cards, especially due to the exceptionally high interest rates that they accrue.

Debt consolidation refers to the converging multiple Credit Card bills, into one loan with a lower interest rate. The underlying principle, in this case, is the fact that it is more convenient and cost-effective to pay off a Personal Loan equated monthly instalment (EMI) than to pay multiple card balances with constantly mounting interest.

2. Undertaking Health Care Expenses

Emergencies always come unannounced. Things can go wrong anytime, and medical needs may arise. When a medical emergency arises, worrying about your finances is the last thing that should be on your mind. An efficient way to procure the required funds to deal with the emergency is to take up a Personal Loan.

These loans can get you funded within a few hours, thereby offering you the much-needed assistance in dealing with the problem at hand, especially in cases where your insurance policy doesn’t cover your expenses completely.

Most basic health insurance policies exclude some illnesses and treatments from its purview, such as cosmetic surgery, cancer or heart disorder. There are also many deductibles and co-pay clauses that require you to pay some amount from your pocket. Hence, by taking a Personal Loan, you can avail funds easily and in no time.

3. Paying Off for Unplanned Expenses

You may not be planning to buy a new car until the next year when your current car collapses without any indication, you may hear a piece of sad news, and may need to travel halfway through the globe to be with a near one in times of despair, and so on.

Life throws numerous challenges in one’s way, and some of them may be better fought with some money in your pocket. A Personal Loan can prove to be just the ideal way for you to meet such unexpected expenses, and that too in a quick and cost-effective manner.

4. Revamping Your Old Home

When it comes to giving your house that much-needed new room, or simply equipping it with the latest gadgets and personal appliance for enhanced convenience, the expenses may mount faster than you could think.

In such a case, a Personal Loan can help you get those extra funds for remodelling your home. For all you know, you could modify the interiors of your house, add a floor, create a garden, whitewash the walls, change the furniture or refurbish the kitchen using the amount disbursed. Besides, in this case, you can claim a tax deduction under Section 24(b) of the Income Tax Act.

5. Taking Care of High-Interest Debts

Managing multiple high-interest loans such as Home Loan, car loan, education loan, and others, can get very tedious as well as confusing because of the constant need of paying off each EMI on the designated date, without missing out on any single payment.

A simple delay or a default in the payment schedule may result in a blow to your credit score. Hence, the smart way to take care of all this is to consolidate all your debts into a low-interest-rate personal loan and repay just that in a timely manner.

6. Financing a New Business

Starting your own business is a dream that may take a backseat due to lack of funds; but, not anymore. Personal Loans can help you get sufficient funds to start your own business, without you having to divulge the details of the same to the lender.

Of course, you would need to start repaying the loan, almost instantaneously, but you would still have a better shot at giving your entrepreneurial venture a much-deserved try, which would be rather tricky if you instead opt for a Business Loan.

Personal Loans are given to the individual and there is the flexibility of using the funds in your own way, hence, making it the ideal alternative for a vast majority of start-ups.

7. Enjoying a Vacation

If you have been looking forward to enjoying a holiday with your loved ones, but don’t have the requisite funds to do so, you can seek a Personal Loan to this end. Since the loan is approved and disbursed in as little as 1 to 3 days, you will have no troubles procuring it, and will be able to pay for your airfare, hotel stay, sight-seeing as well as shopping expenses with ease.

8. Sponsoring Higher Education

Paying for higher education of your child is getting expensive by the day. It is no longer convenient to pay for higher education from your own pocket, especially if you come from a middle-class family. While you can seek an Education Loan, in most cases, it is available only for top institutions, that too with a cap on the disbursed loan amount.

Therefore, a Personal Loan often proves to be the best choice for students wanting to pursue their education from the Institute of their choice. A Personal Loan can often cover up the entire expense of the studies, and in some cases can even help pay for the additional expenses as well.

9. Paying Off for Personal Events

Weddings in India are an expensive affair. Hence, rather than spending all the savings and investments on the wedding or the honeymoon, a vast majority of people prefer taking up a Personal Loan and paying off the related expenses. The convenience of repaying the loan in the form of small, easily manageable EMIs has resulted in the unprecedented popularity of this credit type.

10. Purchasing Gadgets

Whether you wish to buy a gadget, or invest in a home appliance, if you do not have access to the requisite funds, you can simply get a Personal Loan. The disbursed loan amount can help you make your big-ticket purchase with ease, and you can then conveniently repay the amount over the course of 1 or more years, depending on your ability to do so.

So, what is your reason to get a Personal Loan? Do you wish to go on a holiday, or do you have an urgent expense that needs to be paid off? Regardless of the reason, you can easily apply for a personal loan, and get it approved within a matter of a few hours! After all, your financial obligations deserve your utmost attention!