Top 10 Reasons Why More People Are Using Personal Loans These Days

Updated on: 14 Dec 2021 // 27 min read // Personal Loans
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As an adult, one is often faced with varied obligations, both of personal as well as of financial nature. While personal matters can be dealt with, in one way or the other, financial obligations often bring us to a standstill. Thankfully for us, all the leading banks and lending institutions of the nation now offer Personal Loans. These loans are unsecured, open-ended, which proves to be of immense use in a wide variety of situations.

That being said, as compared to just a few years earlier, more and more people are now opting for this loan type, most likely due to its ready availability. Of course, there is more than just one reason for people to use this relatively expensive loan.

Let us quickly take you through these reasons, and can see for yourself, if you too want to opt for a UCO Bank Personal Loan or any other Personal Loan, for that matter.

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1. Debt Consolidation

This is one of the most common reasons for taking a Personal Loan, especially in today’s day and age, where excessive use of Credit Cards is putting quite a few people in the debt trap. Personal Loans, although expensive with interest rates ranging from 11-22% per annum, still prove to be cheaper than Credit Cards which accrue an interest rate of over 35%. Besides, some people have more than one Credit Card payments to handle each month, and keeping track of the billing cycle of each card can prove to be quite a cumbersome task. In such cases, it is best to clear all the outstanding debts using a Personal Loan, and simply repay one loan instead. Not only is this cost-efficient, but also saves one’s precious time. Moreover, in the long run, this choice also leads to an improved credit score, making it a win-win situation for the borrower.

2. Home Renovations

Whether one wants to redesign their home, add a room or two, or undertake some repair and maintenance work, a Fullerton Bank Personal Loan has been the go-to option for the much-needed home renovations. A Personal Loan from Fullerton is one of the new age products and can help you get finance for big-ticket household purchases such as washing machines, refrigerator, etc. 

3. Improving Credit Rating

A large number of people are now opting for a Personal Loan in a bid to build or improve their credit scores. People with no or poor credit scores can now procure a Personal Loan, and on timely repayment of the same, witness the much-desired boost in their credit rating. While the efficient repayment of the loan will be perceived by the Credit Bureau as responsible borrower behaviour, the tenure of your loan will help lengthen your credit history, which again, will work in your favour.

A good credit score will help you in the future when it comes to taking more significant loans such as Home Loans and Business Loans, amongst others!

4. Funding a New Business

Dedicated Business Loans offered by commercial banks are more often than not offered to enterprises with a comparatively high credit rating and at least 2 years of experience. Unfortunately, a new business neither has the experience, nor the credit rating to be eligible for such a loan. Hence, the vast majority of new businesses are now looking forth to Personal Loans to fund the needs of their business.

5. Medical Bills

When it comes to medical emergencies, there are some expenses that insurances don’t cover, and these expenses can certainly mount faster than one can imagine, in case they are underinsured or uninsured. In such cases, most people find it best to rely on a Personal Loan to meet these expenses, including those related to eye care and dental care.

6. Higher Education

While Student Loans are quite easily available, most commercial lenders only prefer to sanction loans taken for Government Recognised Institutions. However, Education Loan is usually limited to a maximum of Rs. 20 Lakh, which may not be sufficient for student’s willing to study abroad. Thus, many ambitious students now opt for a Personal Loan instead. Not only does a Personal Loan have an incredibly high loan limit of up to Rs. 50 Lakh (depending on the borrower’s repayment ability), it can be procured regardless of which institution the student wants to pursue their education. That being said, it is important to remember that a Personal Loan is quite expensive as compared to a regular Education Loan, and it comes without the moratorium period.

7. Travelling

Whether one wishes to pursue their dream vacation or need to travel for emergency purposes, a Personal Loan can almost always come to rescue. If the borrower enjoys a good credit score and has a reliable source of income, they can conveniently avail a Personal Loan and set foot on their expedition as and when they please.

8. Wedding Celebrations

Indian Weddings are nothing less than a gala celebration. With numerous ritual proceedings and following the actual wedding ceremony, marriages can easily last anywhere between 3 to 7 days. Hosting hundreds of guests over such a long span of time comes with its own expenses, not to mention the expenses pertaining to the attire, décor, gifts, photographers, entertainers and more! No matter how much one is prepared for this expensive affair, there are always last-minute additions to the list, which gives way to the need for additional funds. A Personal Loan is widely opted for to procure these funds with incredible ease so that the most special occasion of life is celebrated with full fervour.

9. Moving Expenses

Whether one is moving from one city to another or simply switching homes in your own town, shifting often proves to be more expensive than one can imagine. After all, one needs today the moving company, arrange for the deposit of the new accommodation, and compensate the broker and much more. These costs can accumulate quickly, which is why a large number of people who are planning to move bases rely on a Personal Loan to fund the move.

10. Purchasing Gadgets

Smart phones, gaming consoles, latest desktops and laptops, home appliances and more; in today’s times, these items have become more of a necessity than a luxury. Keeping in line with the growing need for these high-end gadgets, most leading banks of the nation willingly offer Personal Loans.

While more and more people are relying on Personal Loans to fund their dreams as well as obligations, every borrower must remember that the onus of paying the relatively high interest lies on their shoulders. Besides, it is exceedingly important to repay the loan in full, and in a timely manner, lest the borrower stands a chance to lose out on their credit scores.

Also Read: Best Personal Loan Interest Rates for 2019 in India

To apply online for Best Credit Cards in India,  Secured Loans and Unsecured Loans, visit mymoneymantra, the leading online lending marketplace that offers financial products from 90+ Banks and NBFCs. We have served 7 million+ happy customers since 1989.

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