When a personal loan is the best solution

We list 5 instances when taking a personal loan seems like the most logical choice.

Though most of us earn a sufficiently high income, we also practice frugality. Life is uncertain, and it throws many curveballs your way. There can be a variety of situations in your life which may necessitate the paying of a large amount of money upfront. In the times that you don’t have the necessary funds at your disposal, you can take a personal loan to pay for your goals.

Here are 5 instances when a personal loan is the best solution:

* To get a good credit score. Those who have never taken loans before might imagine that they can easily apply for a personal loan and get it. But banks first check your credit score when you apply for the personal loan – and there won’t be a credit score to consider if you’ve never taken a loan before. This can hamper your chances of getting other loans to buy a house or a car. Here’s a tip to get a good credit score: take a small personal loan and repay it within a year. But do check the personal loan interest rates being offered before you sign up.

* To fund sudden expenses. Emergency expenses always come unannounced – that’s why they are called emergencies! It could be a month-long trip for your child’s school, or an urgent medical procedure that your parent needs, or a credit card loan that you need to repay. Whatever the reason, you can always apply for a personal loan to fund the expense. The bank does not concern itself with why you need the loan, but it certainly checks your loan eligibility before giving approval.

* To take a foreign holiday or spend on home renovation. You and your loved ones may have wanted to take a foreign holiday for several years now. Or you may have wanted to take a sabbatical for a few months just to travel and broaden your horizons. Or your home renovation project may still be pending because you don’t have the necessary finances for it. You can get easily get a personal loan to pay for these dreams.

* To start a new business. A lot of people are realising the value of working for themselves. It gives personal satisfaction and the joy of achievement. Many people also start their own businesses while holding day jobs. However, starting a new business – whether a home based one or one that requires working premises – requires capital. This capital can come from a business loan.

* To make a down payment on a new asset. You have always wanted to own your own house. Or buy a snazzy new car for your spouse. But making the down payment on these assets has always been the problem that held you back. With a personal loan, you can arrange the money for the house’s first instalment, and even the stamp duty and registration fees. Meanwhile, a personal loan can also help you make the first payment towards buying a car or two-wheeler.

When a personal loan is the best solution

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