Over the last few years, the Indian government has been encouraging small business entrepreneurship by devising several lucrative schemes for young minds. It has led to a substantial growth rate in the country, resulting in multiple employment opportunities for the available workforce. The growth rate, however, is non-uniform, and wages are inefficient in catching up with the growing aspirations and rising living costs. Even when you’re not surviving paycheck to paycheck, there are times when you might need additional funds for education, weddings, vacations, home improvement, or medical emergencies.
There is an increasing trend of applying for a Personal Loan online to cover the gaps in funds arising from such situations. Several NBFCs offer short-term Personal Loans to people with a shortage of funds due to delayed salaries, they do not demand collateral or charge high-interest rates on such loans.
Let’s take a look at these worthy funding options.
Deciding if You Need a Personal Loan
While a loan is a financial lifeboat, consider the following things before taking the leap.
- Why do you need a loan?
You can use Personal Loans to fund any expense which may include purchasing holiday gifts or upgrading a computer. However, be clear about what you want to do with the funds. Before you apply for a Personal Loan, calculate how much you need to cover the planned expense well in advance and borrow only what you need.
- What does the loan cost?
Before making the final decision, calculate the total loan cost, including all interest rate charges, processing charges, and additional fees. Compare different loan options to ensure you get the lowest possible interest rate without hefty additional costs and charges.
- Can you handle debt?
Those already struggling to cover their regular expenses and pay their current debts may make matters worse with additional loans. However, if you are planning to consolidate multiple debts by paying everything off through a personal loan, it can be termed as a sensible move.
- Can you afford monthly EMI payments?
Before borrowing, always consider your repayment capacity for EMI payments. It means calculating the monthly EMIs using a Personal Loan EMI calculator and factoring in your budget and ability.
Efficient Ways to Use a Personal Loan
Borrowers consider Personal Loans as one of the best ways to finance a big-ticket purchase that one cannot afford upfront. Here’s what makes personal loans so desirable.
- A Great Alternative to Payday Loans
When your salary is delayed and you need instant funds for an emergency, Personal Loans help save significantly on interest rates compared to high-interest payday loans. While payday loans have very short repayment terms of a few weeks, Personal Loans have tenures of up to 48 months, making repayment easier for the borrowers. Longer repayment terms of Personal Loans keep their costs much lower than payday loans.
- Debt Consolidation
Debt consolidation is a popular reason to take out a loan. Borrowers use it to pay off multiple existing loans or credit card bills and combine all the outstanding balances into a single monthly payment. Grouping the debt gives a more convenient time frame to pay off the balances without stressing your monthly budget. Low-interest rate is the most significant advantage of taking a Personal Loan.
- Home Remodeling
Many homeowners use Personal Loans to upgrade their homes or conduct necessary repairs. They are good fits for people with low equity in their property or who do not want to borrow a home equity loan or equity line of credit. Unlike home equity loans, Personal Loans do not require collateral to secure the funding. Those looking to fund small or medium-sized home remodeling projects of up to 10 lakhs will find Personal Loans highly lucrative financing options.
- Medical Emergency Expenses
- Medical emergencies can often be significantly expensive. Such healthcare bills are common reasons for people to take out instant loans, especially when the procedure is costly. Borrowers can apply for a Personal Loan to cover the costs of unexpected medical emergencies.
- Consumer Durables
If you have been thinking of purchasing a big-ticket item, like an iPhone or a gaming device, or willing to upgrade your washing machine, refrigerator or smart TV, but are hesitating to make a considerable down payment, then a Personal Loan is the best solution. It will provide you with instant funding for any of your needs. The best part is you can buy whatever you want and whenever you want with a Personal Loan and repay in easy monthly instalments.
- Wedding Expenses
According to reports, the estimated cost of an Indian wedding ranges from ₹ 5 Lakh to 50 Lakh or above. Couples who are short of cash can avail of a loan to cover the expenses and repay later. A wedding loan can easily cover big-ticket items like the venue, outfit, photography, wedding planner, or caterer. Those who don’t want to deplete their bank account in a single day can use a loan to plan their wedding the way they want.
- Vacation Costs
An average vacation does not cost enough to require a loan, but what about a luxury cruise, international family trip, or honeymoon? Whether celebrating an anniversary or planning for a vacation to a dream destination, a Personal Loan can help cover various costs, including tickets, accommodation, visa, sightseeing, adventure activities, and shopping. Those who want to go on an extended or lavish vacation will find paying for it using a loan more convenient.
- Education Overheads
With soaring education costs, people turn to private loans to pay admission, tuition, and related expenses. Salaried employees who are pursuing Executive MBAs or higher studies along with their job can go with this option. A Personal Loan for education can help you to cover considerable education expenses
Conclusion
No matter the circumstance, when the salary is delayed, a Personal Loan is an excellent way to cover various costs. However, the key is to use the financial resources responsibly and pay back on time. Whether you want to host a perfect wedding, get admission into a dream college, or plan a lavish vacation, apply for a Personal Loan to cover the costs and repay as per your financial convenience.
Summary: Personal Loan is money borrowed that people use for debt consolidation, large purchases, or emergency expenses. When salary is delayed, they can borrow a loan and pay it back in monthly installments over 48 months of repayment tenure.