The Buyt Desk
A personal loan is an unsecured loan that could help you with funds for specific events. You don’t give collateral in a personal loan and that is why it is termed as an unsecured loan. In a secured loan you give collateral of an asset like a home loan where your home is the collateral against which you get a loan. This loan can be used only for a specific purpose. A personal loan is a short term loan and an individual gets two to five years for repayment. The long-term loan provides a longer payoff time.
Here are a few situations that can be funded through a personal loan –
Wedding Loan – Lot of expenses happens in a wedding from the venue, jewellery, food, accommodation, etc. and people look for extra funds to manage that. Instead of draining out saving or borrowing money from friends and relatives, which causes embarrassment, it is better to take a wedding loan. It is one of the personal loan products that will help you manage funds for the dream wedding. The loan gives you enough time to pay off the amount, and you can pay it in an equal EMI.
Home Renovation Plan Loan – If you are thinking to renovate your home, getting a modular kitchen, changing the interior of your house or anything, you can go for the home renovation loan. This loan provides you with the extra fund for replenishing your home. Home renovation enhances the aesthetic of the place and also increases its resale value, therefore, people spend a decent corpus on home renovation.
Travel Loan – If travelling abroad or at an exotic location within the country is on your wishlist. You can fulfil this dream with a travel loan. It is also a personal loan product. With the travel loan, you can pay off all the travelling costs you will incur, such as transportation fare, accommodation, etc. and take your family with you without jeopardizing your savings. The fund you get into a travel loan can be used anytime for anything.
Medical Loan – Health insurance act as a hedge in a medical emergency. Nevertheless, it does not cover all the medical costs. Medical loans coming under the personal loan help you get extra funding to address the health emergency. With this loan, you can pay the medical bills, OPD fee, health supplement prescribed by the doctor, etc.
Debt Consolidation Loan – If your credit card bills, gold loan and other loans are troubling you, consolidate them into one, then take a debt consolidation loan, a product of a personal loan and pay it off in easy EMI.
Education Loan – Money should never become a barrier in your child’s higher education. If you do not have enough funds to finance your child’s higher education nor have invested in the same, the last option you can try is the higher education loan. It is again a product of a personal loan.
Used Car Loan – For used car buying, you can again get the used car loan which is the product of a personal loan.
Word of Caution Before You Apply for a Personal Loan
Personal loans are definitely easy to get. Banks and non-banking financial companies (NBFC) give personal loans based on an individual’s credit history. They check the credit score and if the credit score is good it is a lot easier for those with a bad credit score. A person with a bad credit score may get a loan with a higher interest rate. But then there are fintech companies that offer easy personal loans without emphasising the individual’s credit score or history. You need to be careful with such loans. They charge high interest and are quick to give you a loan. But they are harsh when it comes to repayment of loans and missing even a single EMI could mean steep charges. A personal loan should always be your last resort. If you do take one then do have a proper plan of how you will pay off the loan.
