When we experience lack of finance or shortage of funds we find it difficult to complete or mission or execute a task to its completion and the consequence will be sometimes severe also depending on its nature and urgency. There are various options available today to get repayable finance whenever we require. Availing a loan is the normal solution to get through the financial crisis. In most of such situations we go for personal loans since it is quite easy to get personal loans and there are flexible options also. However, it is not advisable to go for personal loans whenever we have cash crunch just because they are easy to avail so as to get quick relief from the problem.
Personal loans are granted without asking embarrassing questions or producing proof. The borrower need not provide security while taking personal loans. All banks provide personal loans. In spite of all these advantages why it is not advisable to go for personal loans? The main reason is that the interest rates for personal loans are quite high. Especially at a time when the borrower has poor credit score the rate of interest for personal loan will be still higher. Though personal loans provide immediate financial relief they are not good always. Hence it is all the more important for the borrower to confirm that he has a good reason to go for personal loan.
When one can go for personal loan?
- Want to conduct a wedding
Though wedding is an expensive affair it is expected to be a one-time event in the life of a person and hence one cannot compromise much on the wedding expenses. Personal loan is a simple and easy solution to meet the wedding expenses and when a person conducts the wedding using a personal loan the function will go hassle-free and at the same time he will avoid all unwanted expenses so that total expense will not exceed the loan amount. Based on his income the banks will provide personal loan.
- Want to repay all existing loans
Many people land in a difficult situation wherein they have to pay multiple loans concurrently. A person might have availed vehicle loan, home loan and education loan and finds it really difficult to repay them altogether. As a result he faces a financial emergency. In such a situation he can go for a personal loan with which he can repay all the other loans. Then the personal loan will be his only financial liability. This will considerably reduce his interest burden and by doing so his CIBIL score (* read more from cibil.com) will also improve. The banks provide personal loans for clearing existing debt.
- Want to send the child for higher education
The parent cannot compromise on providing the best possible education to the son/daughter. The money that one spends to provide higher education to his son/daughter will ensure a bright future for him/her. Quality educational is quite expensive and in most of the cases one may have to avail loan to meet the expenses. Since the eligibility criteria for education loans are very tough the easiest option is to avail personal loan.
- Want to relocate
When one has to move to a new place along with his family, the shifting expenses are unavoidable. He may have to spend heavily for transportation, renting an accommodation and for setting up the house. Instead of taking money out of his savings it is advisable to meet the relocation expense by availing a personal loan.
- Want to clear credit card debt
Mounting of credit card debts will lead to severe financial problems. Credit Card debt will add up very fast because of very high interest rates. Since the interest rate for personal loan is considerably lower, one can clear his mounting credit card debt by going for a personal loan.
- Want to improve credit score
When one has credit card debt, personal loan will provide him a better account mix. When he has different types of loans, his credit score will go up. When compared to payday loans personal loans are better solutions to the bad credit problem.
If it is for the right reason, person loan is the best option and is also very useful. Prior to going for a loan it is very important to weigh all the options. Also, one may keep in mind that if his credit score is excellent personal loan is indeed a good option for him. When the borrower is with a poor credit score the rate of interest for personal loan may higher than even the credit card rates. Before availing the personal loan one must check the rate of interest.