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In the dream world, everyone would have enough money to pay any expenses and live without worry. Unfortunately, in real life, this is not how it works and that's where the personal loan comes in! A quick and flexible way to obtain financing for the continuity of your business project or for a trip is by getting a personal loan.
For example, at lendingplate, you can apply for a personal loan online and get your funds instantly, provided you qualify and provide the needed documents. You can apply up to 2 lakhs and get it immediately. The reasons for asking for a personal loan are endless, and here we will show you some of them.
There are some situations where we really have good reasons to take out a loan. Of course, always thinking in a planned way, credit searching can be really beneficial in several situations.
In fact, the demand for personal loans has grown in recent years. But it is always important to remember that this decision must be very well thought out so that you do not get lost in the middle of debt.
Follow along if you want to know the main reasons to take out a loan!
A personal loan is a type of loan granted to individuals for various purposes. You do the simulation with the finance company of how much you need and see your instalments in a structured schedule of fixed payments. This type of loan is unsecured because you don't need to place any collateral (like your house, car, etc.) to get the loan.
Most banks or finance companies lend money to individuals to use in different ways. Thus, one of the great advantages of this type of personal loan is that there is no need to justify what the money will be used for. Another great thing is that the applicant does not need to present collateral (such as his car, for example) to obtain the loan. Thus, it's a simple and flexible solution that can help you in times of need.
Why take a personal loan? Here are the reasons -
Personal loans offer a clear repayment plan with fixed EMIs over a set tenure. This makes it easier to manage finances. You may select between short or long durations depending on their comfort. This way, it ensures that monthly payments remain manageable without straining your expenses everyday.
Note that most personal loans run for up to five years. So they are a great way to improve your credit score. Making repayments on time shows lenders that you are reliable. Be it a small or large loan, it may lift your CIBIL score if you repay without any default. A higher score improves eligibility for borrower with larger loans (such as home loans).
Personal loans offer speedy access to big amount unlike the circumstances when you borrow from a friend or family member. That makes it more helpful to meet emergency needs like education expenses, medical costs or any other significant financial needs.
Now that you already know what a personal loan is, we will help you understand in which situations making this request becomes a good way out. Check out!
If you have debts on credit cards, overdrafts, or other creditors, applying for a personal loan to pay off these amounts is a good idea. In addition to avoiding higher interest rates, you don't risk getting into too many debts that might get you a bad credit score. This can help you to organize yourself financially.
When properly managed, a personal loan can be an excellent financial management tool, allowing you to pay overdue bills or debts incurred through the use of credit cards while paying a monthly instalment with lower interest rates.
The holidays are coming, and you want to take that trip you've been dreaming of for years but don't have all the money you need? A personal loan can help. In addition to having lower interest rates than credit cards, the loan allows you to plan your trip with less time in advance.
A great opportunity has arisen to study at that dreamed university, or even abroad, but you don't have money? Courses and specialisations can be quite expensive. In that case, a loan could be your only way out! You can always count on a personal loan to help you boost your career. After all, education is essential for any person. Without studying, you'll be nothing and the more the qualifications, the greater the chances of getting better positions and salaries.
Do you want to make changes to your house? Whatever your needs, expenses are inevitable. Applying for a personal loan and helping you pay for all costs can guarantee discounts when paying for materials in cash!
As the name implies, unforeseen events are impossible to predict. So, if you don't have an emergency reserve, you have nothing to do but take out a personal loan. We can consider unforeseen events such as accidents, a pipe that burst in your house, or some health problem that did not exist before. There is not much to do on these occasions, and a personal loan can be a great way out.
However, it is very important to know how to differentiate the unforeseen from the bills that arise "out of nowhere" but that you knew very well that they would arrive, such as school necessities, among others. Know how to differentiate the real reasons to get a loan and those bills you need to schedule every year to pay.
After all, if you are going to apply for a personal loan for all one-off expenses, there will come a time when you will no longer be able to pay them. Therefore, attention and discipline are fundamental!
This is one of the major reasons to apply for a personal loan. That time you wish to open a new business is certainly when you will need a large amount of money that even you can't get. But, just like the venture's opening, asking for a personal loan to start a business is a great idea. However, you should think about it carefully and plan ahead of time so that you don't start your business broke. This is also true if you already have a business and need to invest in it. Planning and organization are key!
Have you always wanted to visit another country or buy the car of your dreams, but you don't have any cash? How about applying for a personal loan? It may seem silly to some people, but dreams come true, are also part of our lives, and are great motivators for everyday life. So, if it is done in a very planned way so as not to compromise your budget, taking out a loan to fulfil your dreams can be a good choice.
Like debt consolidation, paying off your credit card can greatly benefit a personal loan. You may not have many different debts, but even with high credit card debt, it might be worth considering a personal loan to sort it out.
Credit cards come with higher interest rates, which you can potentially avoid. Applying for a personal loan to pay for a credit card debt can be a smart way.
Daily, you have to deal with unforeseen circumstances. Some repairs, health problems, and unemployment, among others. This finds most people are not prepared. In such a case, it is necessary to resort to personal loans.
Applying for a personal loan doesn't have to be a tedious and bureaucratic process. Here at lendingplate, just have your documents in hand to make an online request quickly and safely! Make a change right now!
Financial institutions & banks evaluate a few things before approving your loan. They consider your repayment potential as well as your monthly income (sometimes your credit score, too). You can secure a better interest rate if your lender sees you have a strong profile.
A personal loan might be a great choice for life events or funding projects if you meet a few conditions. The following makes a personal loan a good idea for an individual -
A decent credit score (above 700) is great for most lenders. Loans are possible with lower scores. However, the personal loan interest rates in such circumstances might be higher. However, you can get a better rate if you have a strong credit profile.
Note that personal loans are mostly unsecured. Thus, lenders look closely at your repayment track record. Your credit report reflects every timely or delayed (or even missed) payment over the past years. A consistent history ensures trust. On the other hand, a short credit history or defaults may either reduce your loan eligibility or increase the charges.
Your DTI Ratio is the share of your income that goes toward existing debt. A higher ratio means repayment risk to lenders. This may result in reduced loan amounts or steeper interest rates. A low ratio will increase the chances of loan approval.
Lenders prefer you if you have a stable source of income as a salaried or self-employed individual. However, some institutions set a minimum income requirement. But mostly lenders focus on employment continuity & proof of income. Higher incomes improve your approval chances as well as loan terms.
Pre-qualification lets you check potential loan offers as well as interest rates without having a major negative impact on your credit score. This step is because personal loan rates can vary widely. Reviewing prequalified offers helps avoid unnecessary hard inquiries that may impact your score or loan terms.
Personal loans are great for covering urgent or valuable expenses. But there are situations where choosing one may not be a smart move. Here are the cases-
A low credit score may push interest rates to 30 to 36%. This makes repayment quite expensive. Such high costs can strain your finances & outweigh the loan benefits. If borrowing is an urgency for you in spite of the poor score, you'd better explore lenders who offer loans with weaker credit histories.
Evaluate your budget honestly before taking on a personal loan. Adding another EMI can be risky if your monthly cash flow is already tight or you are only able to make minimum payments on existing dues. Missing payments may damage your credit or result in penalties.
Using a personal loan for something like a car, home, or education may not be a great idea. Note that specific loans for such purposes offer longer repayment terms & lower interest rates. A personal loan in such a circumstance could turn out to be a costlier choice.
Personal loans cannot be used for paying tuition fees or business capital. The lender has clear restrictions. Thus, it becomes quite significant to confirm permitted uses before you apply for the loan.
Taking a loan for luxury items is never a great idea. You will be paying your interest. The total cost of the item will only rise. Borrowing for such incidents will create a cycle of long-term debt & overspending.
While it would be nice if we all had enough money to pay for all of our expenses without worrying, we know that isn’t always the case. Sometimes we have to borrow some money, and that's where a personal loan can be a good solution.
The best way is to remain transparent about your purpose. You may say the reason is any of these i.e. consolidating debts, managing medical expenses, home renovation or funding education. Lenders typically prefer clear & responsible reasons for taking personal loan. Avoid stating nonessential or risky purposes such as luxury spending. Note that this reduces approval chances.
Personal loans are versatile. They are not unrestricted. Most financial institutions & banks let them for medical bills, travel, education, weddings or debt consolidation. They prohibit the use of personal loans for business ventures or speculative investments. So, it is better that you give acceptable reasons to apply for personal loans to your lender before applying. This way, you can avoid unnecessary complications as well as rejection.
Personal loans cannot be used for business expansion or stock trading. They are for personal financial needs such as education or weddings (or any other purpose). Misusing funds may violate the loan agreement. At the same time, it may have a drastic impact on your credit profile. You should always clarify your reasons to get a personal loan with the lender in the first place.
You can definitely take a personal loan to consolidate debt. Combining various debts with high interest rates into a single one may help you manage repayments more effectively. This can simplify your finances. At the same time, it also reduces the interest rates. So always ensure the new loan is favourable in terms of rates & EMIs. Give valid reasons to take a personal loan to your lender.
A personal loan can be a great way to finance home improvements. It is more beneficial if you do not want to use your savings. It offers speedy access to funds with fixed EMIs for easy planning. But you should always compare it against alternatives such as a home improvement loan. This may at times offer lower interest rates as well as longer repayment options.
Personal loans are used for emergencies such as medical treatments, urgent travel or unexpected repairs. You need to consider the interest rates as well as EMI obligations before applying. Immediate liquidity can be a practical choice for managing short-term financial pressures if and when needed.
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Unifinz Capital India Limited is a Non Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI). lendingplate is the brand name under which the company conducts its lending operations and specialises in meeting customer’s instant financial needs.
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