Top 10 Reasons Why People are Taking Out Personal Loans in 2020
2020 has been a year of despair and challenges. It has casted upon dual impact on health and finances of people across the globe. It indeed has been an unprecedented year where banks have offered Moratorium at such as large scale in the history of India. We have also seen exceptional fall in the lending rates, so far.
Despite the financial hardships, people are resorting to Personal Loans to meet their financial gaps. We have compiled below a list of 10 reasons Personal Loans are being used for in 2020. If you are also looking out to take a Personal Loan, the compilation might help you relate with your situation.
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1. Reduced Income
In wake of financial disruptions caused due to pandemic, almost all sectors have faced a setback. As a result, salaried individuals are facing the pay cuts or furloughs, while the income of self-employed is also halted to a great extent. As a result, there has been a widespread loss of income for a majority of households.
In face of reduced income and fixed expenditures, those who have good Credit Score and are preapproved for Personal Loans are opting for Short Term Cash Loans to meet their cashflow gaps. It is also interest to note here that Personal Loan Interest Rates have been slashed significantly in the past few months.
2. Medical expenses
Amid pandemic scare, finances of almost every household are deeply disturbed. People are resorting to additional Covid Insurance as a shield against hefty Coronavirus medical bills. Besides there always are other health complications we seek insurance for. In such times of financial chaos, preapproved Personal Loans are handy to pay for medical bills.
3. Debt consolidation
Though RBI has offered a 6-month moratorium to ease up the cash flow issues of people facing financial hassles due to COVID, there is a large section of borrowers who are preferring to repay loan rather than putting EMIs on hold. As deferring loan repayments will accrue additional interest cost.
One of the affordable ways to manage EMIs is consolidating your Credit Card Bills & EMIs into a Single Personal Loan. Thus, debt consolidation is also one of the most common reasons why people opt for Personal Loan. Many lenders have launched special Covid schemes to help their customers borrow easy loans for cash gaps. You can check PNB Personal Loan Scheme called as PNB Sayhog COVID 19.
4. Insurance Premium
Amid COVID19 when incomes are disrupted, there are certain expenses you just cannot put on hold. Insurance is one such sector. You have Car Insurance, Health Insurance & Life Insurance Premiums to be paid each year. Though IRDAI has asked insurance companies to allow customers to pay premium in EMIs, many customers prefer to pay lump sum for annual premium. Being one of the important expenses, some households prefer to borrow Instant cash loans to pay out annual premiums without fail.
5. Investment / SIPs
Markets have been on a complete toss ever since COVID19 turned into a global pandemic health scare. Amid market volatility, many investors see market crash as an opportunity to buy for better gains in future. Though a lender will never approve of a loan for investing in stocks or MFs, many borrowers use Personal Loans for leveraging returns.
6. To pay out Home Loan EMIs
The cost of Moratorium can be very high on Home Loans. Thus whether someone has lost a job, or facing blow to monthly inflows, it is advisable to carry on with home loan repayments. With lowest ever EMIs of Home Loans, it is recommended to serve your loans rather than accumulating additional interest. People are resorting to liquidating FDs or raising Overdraft, Balance Transfer etc to pay out EMIs regularly.
7. Making purchases
Despite economic unrest, life is moving in the hope of better tomorrow. So as we are preparing ourselves for a new normal after COVID 19. Some purchases are essential to walk this journey. For example: A) Laptop, smart phone, tablet etc for work from home, online classes etc. B) FMCG products like TV, cooking equipments, washing machine, vacuum cleaners etc to make living at home convenient. All these things are being purchased using financing options. For, people want to keep the payment burden low at this point in time and serve lockdown smoothly.
8. For business cash flows
Though government have launched several financing options for MSMEs and there are some special COVID Personal Loans for businesses too; Personal Loans are actively sought for business cash gaps. Besides banks have also facilitated complete online borrowing for convenience of customers. For instance, an HDFC Customer can Apply for HDFC Personal Loan right from their home using the mobile or internet banking. These loans are fast and disbursed within 1-2 days.
9. Buying personal vehicle
Due to pandemic, public transport is majorly halted and people are choosing to travel in their own vehicles. Thus sale of second hand vehicles have also been pushed up. While Car Loans are readily available for new purchases, Personal Loans are often resorted for two wheeler purchases and second hand car purchases.
10. For down payment
With a sharp fall in realty prices and Home Loan Interest Rates, it is a buyer’s market. Despite the cash crunch, investors as well as home buyers are using this opportunity for property purchase. In face of low cash in hand, Personal Loan is being resorted for making down payment.
These are some of the reasons why people are borrowing during 2020. The list of reasons to take Personal Loan is a tentative one for educating users. The listed reasons are also not in any preferential borrowing order.
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