Is it a Good Idea to Get a Personal Loan ????

Today, we witness a higher cost of living. As the years pass by, expenses continue to increase, even for the basic necessities. It has become excessively difficult for a man to pay for everything from his salary. This is especially valid in the case of larger investments like purchasing land, hospital bills, construction, purchasing automobiles or jewelry. Man is born with the gift to dream. Hence he strives to achieve. But lack of financial support is what obstructs his goals of making his dreams a reality. So what is the solution to this obstacle? That is where the idea of ‘Personal loan’ comes in. This article is specially created to help you achieve your dreams with the help of personal loans.

Is it a Good Idea to get a Personal Loan

What is a personal loan?

A personal loan is technically referred to as a consumer loan which can be used for multiple purposes thus allowing you to meet any of your immediate needs. What’s more? Personal Loan is provided by financial institutions based on certain eligibility criteria which qualify you for the loan. The eligibility criteria which financial institutions review in order to approve a personal loan includes: employment history, capacity to repay the loan, level of income, type of profession and credit history. For those with a stable source of income, obtaining a personal loan is a viable option as generally financial institutions issue lower interest rates for loans acquired by persons with a stable financial source.

The pros personal loans

● Can be used for multiple purposes
● Interest rates are lower than that of credit cards
● Offers higher borrowing limits
● Approval of unsecured personal loans require no collateral
● Easier to manage personal loans

The cons of personal loans

● Interest rates can be higher for persons with unstable jobs
● Fees and penalties for not repaying on time can be high
● Personal loans require fixed monthly payment and have a deadline for payment
● Failure to repay loans and taking up more than one loans can increase debt

When can you take a personal loan?

Personal loans are multipurpose loans which allows the person to use the loan for a variety of purposes. This is opposed to other types of loans which restrict usage of the loan amount to a specific purpose. A personal loan has no such restrictions. Hence it is generally considered to be very flexible and versatile. Here are some of the most common scenarios when you can take a personal loan:
● For pursuing education goals
Taking a personal loan can help pay education fees, thus allowing you to pursue your education goals and develop the career of your choice.
● For paying hospital bills
In the case of an emergency, such as after an accident or a sudden medical complication, the cost of treatment maybe difficult to bear if the person has low financial reserves.
● For financing a small scale business
Personal loans can be quite useful in starting up a small scale business.
● For purchasing household amenities
Taking a personal loan can allow you to upgrade your household by purchasing the amenities.
● To clear existing debt
Personal loans are very useful to immediately clear outstanding debt and reduce financial burden.
● To relocate one’s home
Personal loans can provide you with the financial backing required to relocate your home to a new place.
● To finance construction work
Personal loans allow you to finance your construction work and build a house or shop or modify your house.
● To fulfil your dream
Personal loans allow you to fulfil your dreams by helping you purchase what you desire.

 

5 Important Things to Know Before Taking a Personal Loan

Despite their usefulness, personal loans are quite tricky. Here are 5 important things to consider before taking a personal loan:

1. Maintaining a good credit history

It is important that you maintain a good credit history while taking a personal loan. If you have a higher credit score, you have a higher chance of being sanctioned loans; especially at a lower interest rate.

2. Comparing interest rates

It is good to compare the interest rates offered at different financial institutions. Why? Since it each financial institution offers a different interest rate. It would be wiser to apply for loan from a financial institution that offers a lower interest rate.

3. Assessing all costs involved

It is important that you assess all the costs involved before taking the personal loan. Borrowing a loan usually carries expenses such as processing fee, late payment fee and repayment fee (apart from returning the loan with interest).

4. Checking the eligibility criteria

It is important that you check whether you are eligible to borrow a personal loan and hence make necessary preparations.

5. Evaluate the cost of your needs and repayment capacity

It is wise to evaluate the cost of your needs so that you can borrow exactly how much you require and your ability to repay the personal loan taken.

 

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