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Reasons to Apply for a Personal Loan

Why choose Personal Loan?

Last Updated 12th Jun 2021

  • A personal loan is an unsecured loan that has no end-usage restrictions.
  • You can avail a personal loan to consolidate multiple debts to single debt and thus clear all dues conveniently.
  • Availing a personal loan can also help you build your credit score as it has long repayment tenure.
  • ‬You can pay off your entire credit card debt by choosing a personal loan at a lower interest rate.‭
  • A personal loan also has tax benefits if availed for home renovation.
  • Best offers on personal loan starts at 10.25%.
Apply for Personal Loan @ 10.25%* Get upto ₹ 1,000* Cashback

9 Best Reasons to Apply for a personal loan

A personal loan is an unsecured loan that is available to both salaried as well as self-employed professionals.‭ ‬An unsecured loan means the loan does not require any collateral or security.‭ The loan is generally applied to meet emergencies like financing medical emergency,‭ ‬debt consolidation,‭ ‬paying credit card bills,‭ ‬financing new business,‭ ‬improve credit score,‭ ‬meeting wedding expenses,‭ ‬or funding a child's education.‭ ‬One needs to have a good credit score to get quick loan approval.‭ ‬A score of above‭ ‬650‭ ‬is considered suitable for a‭ ‬‬personal loan.‭ A personal loan’s interest rate is comparatively higher than other secured loans like home loans,‭ ‬car loans,‭ ‬mortgage loans,‭ ‬and business loans. Below mentioned are top reasons why you should apply for a personal loan.

To Consolidate Multiple Debts

One of the most common reasons to apply for a personal loan is debt consolidation.‭ ‬If you have availed multiple loans like a car loan,‭ ‬home loan or education loan from various lenders,‭ ‬managing these loans can get tedious and confusing because of different payment dates,‭ ‬varied rate of interest and EMIs.‭ ‬Missing any one payment could affect your credit score adversely.‭ ‬That is when a personal loan comes into the picture where you can smartly consolidate your multiple debts into a single debt and balance all your finances.

Improve Your Credit Score

Credit score plays an important role when it comes to loans and credit cards.‭ ‬If you do not have a decent credit score,‭ ‬a personal loan could help you have one.‭ ‬Most individuals apply for small personal loans to improve their credit score by paying the loan on or before time to create a good payment history,‭ ‬which shows the lender your creditworthiness.‭ ‬Paying a loan on time will ultimately raise your score,‭ ‬which will help you apply for a higher loan amount in the future.

To Pay Off Credit Card Debt

It is arguably one of the best reasons to apply for a personal loan.‭ ‬You can pay off your entire credit card debt by choosing a personal loan at a lower interest rate.‭ ‬A lower rate personal loan will help reduce the amount of interest you pay on your card each month,‭ ‬thus saving your time to clear off the accrued debt.

To Finance New Business

Insufficient funds can hinder your dream of starting a new business.‭ However,‭ ‬a personal loan can help you to avail funds for financing the business.‭ ‬Be it purchasing new machines,‭ ‬hiring a new place for setting up your business,‭ ‬etc.‭ ‬Additionally,‭ ‬one can apply for a business loan also,‭ ‬but in that case,‭ ‬you need to prove your financial history and tax-related documents,‭ ‬which is not possible for a new business.‭ ‬So,‭ ‬a personal loan would be the most feasible option to apply.

For Home Renovation

Refurbishing or remodelling is comparatively cheaper than owning a new house, but it also requires a substantial amount of cash to give a new look to your home.‭ ‬This is where a personal loan can help you and meet your requirements.‭ ‬You can use the funds to modify your house's interiors,‭ ‬add a floor,‭ ‬revamp your kitchen,‭ ‬or change the old furniture.‭ ‬Additionally,‭ ‬one can enjoy tax deduction advantages,‭ ‬also under section‭ ‬24‭(‬b‭) ‬of the Income Tax Act.

Meeting Unforeseen Medical Expenses

Medical emergencies can come at any point in time where you need instant funds to meet medical expenses.‭ ‬There might be a chance that your health insurance policy might not cover certain treatments.‭ ‬Applying for a personal loan in such cases would be a great option as you get access to instant funds in less time.

Higher Education Abroad

Taking a personal loan would be a right choice if you want to go abroad to continue your higher education.‭ ‬The loan can be applied to meet all the education-related expenses like paying the education fees and other purposes like accommodation and daily living expenses in a hassle-free manner.

Take A Dream Vacation

A personal loan can be an excellent way to finance your dream vacation.‭ ‬You will get a personal loan quickly if you have a good credit score of‭ ‬650‭ ‬or above.‭ ‬Getting a loan is a suitable option rather than exhausting all your savings which you can use it in the future for some other emergency requirements.

To Pay For Personal Events Like Wedding

Since weddings are an expensive affair,‭ ‬one requires a substantial amount of funds to manage unexpected wedding-related expenses.‭ ‬Personal loans are suitable to get in such cases instead of exhausting all your savings.‭ ‬All you need to do is decide the loan amount and‭ ‬check your Personal Loan eligibility by using an online eligibility calculator.
When it comes to meeting finances,‭ ‬personal loans could be of great help. It helps you meet various purposes like debt consolidation,‭ ‬pay for your medical or credit card bills,‭ ‬finance your new business,‭ ‬pursue your higher education abroad, and many more.‭ ‬The best part is borrowers do not require any collateral or security to get a loan.‭ ‬So,‭ ‬when you are going through a severe cash crunch in your life,‭ ‬you can avail of a personal loan to meet your emergency or personal expenses.

FAQs

What is the best reason to apply for a personal loan?

A personal loan is an unsecured loan and has no end-usage restrictions. Some of the most significant advantages of a personal loan are that it can help you consolidate multiple existing debts to a single debt, improve your credit score and home renovation.

What do banks look at when applying for a personal loan?

Before providing a personal loan, banks check the eligibility criteria such as your credit score, age, income, employment type and experience etc. Bank approves your loan application if you meet the eligibility criteria as specified by the bank.

Do personal loans hurt your credit score?

A personal loan can both help you to build credit score & hurt your credit score. If you repay all your EMIs on time, you can improve your credit score over a loan tenure period and similarly vice-versa.

Are personal loans a good idea?

A personal loan can be a good idea if you have a good credit score. You can avail a loan to meet unexpected financial emergencies such as wedding expenses, home renovation, travel etc. at a lower interest rate.


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Personal Loan News - Jun 2021
  • 2021-06-10 : Rural Loan Collections to be affected by the Second wave
    As the borrowers are continuously facing the issues created by the pandemic, India Ratings - a rating agency reported that the collections of Rural Loan which includes Home Loan, Loan Against Property, Business Loan, Personal Loan, etc. will be vastly affected because of the second wave of Covid-19.
  • 2021-06-09 : Canara Bank announces personal loan scheme
    Under the ‘Canara Suraksha personal loan scheme’, the bank is offering loans from ₹25,000 to ₹5 lakh to financially assist the customers for covid-related treatment. The moratorium is of six months and the scheme will be valid till September 30, 2021.
  • 2021-06-09 : Healthcare credit facility announced by Canara Bank
    Under the ‘Canara Chikitsa healthcare credit facility’, Canara bank will offer loans from ₹10 lakh to ₹50 crores to all the units engaged in servicing the healthcare. Valid till March 31, 2022, the loan will be available at concessional rates with a tenure of upto 10 years
  • 2021-06-08 : Unsecured personal loan of upto Rs 5 lakh to be made available by the SBI
    Under the Emergency Credit Line Guarantee Scheme (ECLGS) SBI is offering a collateral-free loan up to ₹5 lakh, allowing an unsecured ‘covid personal loan’ for covid treatment.
  • 2021-06-01 : Karur Vysya Bank posted 24% growth in Q4 net
    Karur Vysya Bank posted a 24% rise in its net profit at Rs 104 crore in the last quarter of the fiscal ended March 2021. The profit was boosted by retail loans home, LAP, personal, two-wheeler, car education and doctor loan along with business and mudra loan. The lender credit growth during the year was higher at 8.87% and gross advances reached Rs 52,820 crore.
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