A personal loan is usually an unsecured loan – which means loan without collateral. This implies that the interest rates may slightly be higher compared to other loans.
These are multipurpose loans which can be taken for a variety of reasons – a vacation, to make a purchase like television, washing machine, etc.
Personal Loans can help in plenty of ways some of them are listed below:
Consolidate Small Debts
One may get stuck in a situation where one might need to take a personal loan to get rid of many small high-interest rate debts like money lenders and other money lending options which charge higher interest rates. One can take a personal loan and pay off these small debts thus eventually only pay one low-interest rate debt.
Getting rid of high-interest Credit Cards
There is a chance that credit cards have a higher interest rate compared to personal loans if this holds true in your case take a personal loan and get rid of the high-interest credit cards. For bigger purchases like cell phones, laptops you can take out a small personal loan at low interest rather than by making payments using your credit card.
Check Out Top 10 Personal Loans for Expats
Personal Needs or Emergencies
There are certain medical expenses that are not covered in health insurance these include accidents, critical illnesses (cancer, tumor, etc) thus taking a personal loan and repaying it is a better option than to compromise on health and other medical facilities. Also, personal loans are usually processed faster and require fewer formalities as compared to other loans.
Personal loans are helpful in case of other personal needs which may include marriage expenses, vacation expenses all these can be paid when a personal loan is taken.
Check: State Bank Personal Loan
Unexpected Business Requirements
A business may require some money due to some unforeseen circumstances like the sudden breakdown of machinery, laptops, etc. There are numerous reasons for which an unexpected need for money arises in business. Business loans are not easy to get as there are a lot of formalities along with the eligibility criteria of the loan that needs to be met.
Thus, one can take out a personal loan in case of any business emergency or requirement as well.
Substitute for breaking Long Term Investments
There are numerous situations in which an urgent requirement of money may arise and it is possible that you might have prepared for these needs. It is important to calculate the cost of taking out the money from a long term investment plan and taking a personal loan.
Taking out funds from your long term investments have further future implications as well, like you may not be able to achieve your financial goals as you had initially planned.
The amount of loan you take will have to be returned but any amount you take out from your savings may never be able to find its way back in the investments. Thus, it might be more feasible in certain situations to take out a personal loan rather than breaking a long term investment. It may also help you in managing your retirement fund or investment goals.
Check: Arab Bank Personal Loan
Check the following while applying for Personal Loans:
- Find out the various documents required by the bank for the approval of your personal loan. Check if the interest rate is low as compared to the other options
- Compare personal loans with a number of banks compare their interest rates and other fees & charges
- Check for any hidden charges that might add up to your personal loan
- Read the documents carefully before signing for the loan
- Check and know what the exact monthly installment of the loan would be.
- Know or check what are the foreclosure charges, in case you decide to close the loan beforehand.
Check Out Top 10 Personal Loans