Today, lots of people choose personal loans to handle their money. Whether you have surprise bills, big plans coming up, or want to combine what you owe, personal loans are handy and easy. This blog will tell you the top five reasons why getting a personal loan could be good for you. We'll give you examples and tips to help you decide if it's the right choice.
Debt consolidation means putting all your debts together into one loan that has a lower interest rate. This helps because you only have to make one payment instead of many, making it simpler to handle your debt.
Lots of people use personal loans to put all their debts together because usually, these loans have lower interest rates than credit cards. When you combine debts with high interest into a personal loan, you pay less interest overall and can clear your debts quicker.
Example:
APR stands for Annual Percentage Rate. It's the total cost of borrowing money over a year, including interest and any extra fees.
Imagine you have three credit cards with the following balances and interest rates:
Credit Card 1: ₹1,00,000 at 18% APR
Credit Card 2: ₹60,000 at 20% APR
Credit Card 3: ₹40,000 at 22% APR
By consolidating these debts into a personal loan with a 10% APR, you can save on interest and streamline your payments.
| Credit Card | Balance | Interest Rate (APR) | Monthly Payment |
|---|---|---|---|
| Card 1 | ₹1,00,000 | 18% | ₹3,000 |
| Card 2 | ₹60,000 | 20% | ₹2,000 |
| Card 3 | ₹40,000 | 22% | ₹1,500 |
| Total | ₹2,00,000 | 19.33% (avg) | ₹6,500 |
| Loan Amount | Interest Rate (APR) | Monthly Payment |
|---|---|---|
| ₹2,00,000 | 10% | ₹4,300 |
By opting for a personal loan, you reduce your monthly payments from ₹6,500 to ₹4,300, saving ₹2,200 monthly and potentially thousands over the loan's lifetime.
Life is full of big moments like weddings, having babies, and paying for school. These things usually cost a lot of money.
Getting ready for big moments in life can be a lot to handle money-wise. Personal loans give you the money you need right away so you can handle the costs without using up all your savings.
For example, a wedding in India costs about ₹20 lakh on average. Instead of using up your savings, you can get a personal loan to pay for it. Then you can enjoy celebrating without worrying about money.
Rahul and Priya are planning their dream wedding but are short on funds. They take out a personal loan for ₹20,00,000 at a 12% APR, ensuring their special day is everything they've imagined without financial strain.
Life is unpredictable, and unexpected expenses such as medical emergencies, car repairs, or sudden job loss can arise at any time.
Personal loans can help a lot when you're in a money crisis. They're approved fast, so you can get the money right away when you really need it.
Sunita's car breaks down, requiring ₹2,00,000 in repairs. Without enough savings, she takes out a personal loan at a 12% APR, covering the cost and getting back on the road without delay.
Having a good credit score is really important. It helps you get better deals on loans, lower interest rates, and more chances for good money things.
Getting a personal loan and paying it back on time can make your credit score better. It shows you can handle owing money well.
Make on-time payments: Consistency is key.
Keep loan balances low: Avoid maxing out your loan limit.
Monitor your credit report: Ensure accuracy and track progress.
Ravi wants to improve his credit score. He takes out a small personal loan of ₹1,00,000, uses it wisely, and makes regular payments. Over time, his credit score increases, opening doors to better financial opportunities.
Remember, personal loans don't fix everything. It's important to make smart choices to handle your debts and money situation well.
Personal loans are handy for lots of money needs, like putting all your debts together, fixing up your home, handling big life moments, or dealing with surprise bills. If you know how they help and use them smartly, you can make good choices that keep your money in good shape.
We EazyBankLoan understand the process of procuring a loan can be stressful. That is why we take care of your Personal Loan application process, saving you time and hassle by handling the paperwork and communication with the loan providers.
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| Reason | Debt Consolidation |
|---|---|
| Debt Consolidation | Combining multiple debts into one personal loan with a lower interest rate simplifies payments and reduces overall interest, aiding in faster debt repayment. |
| Major Life Events | Personal loans provide immediate funds for significant life events like weddings or education expenses, allowing individuals to manage costs without depleting savings. |
| Unexpected Expenses | In unforeseen circumstances such as medical emergencies or car repairs, personal loans offer quick approval and disbursement of funds, enabling individuals to address urgent financial needs. |
| Building Credit | By responsibly utilizing and repaying personal loans on time, individuals can improve their credit score, enhancing their financial prospects and access to better loan terms in the future. |
| Conclusion | Personal loans offer versatile solutions for various financial needs, from consolidating debts to managing unexpected expenses. Responsible usage can positively impact financial well-being. |
Interest rates vary based on credit score, loan amount, and lender. On average, rates range from 10.50% to 24%.
Approval times can vary. Some online lenders offer approval within minutes, while traditional banks may take a few days.
Yes, personal loans are versatile and can be used for a variety of purposes, including debt consolidation, home improvements, and major life events.
Taking out a personal loan can impact your credit score. Timely payments can improve your score, while missed payments can have a negative effect.
Repayment terms vary but typically range from 12 to 60 months. It's important to choose a term that fits your financial situation.
A personal loan can be used for almost anything, like paying off debts, medical expenses, home improvements, travel, or buying gadgets.
Yes, you can use a personal loan to fund your holiday or travel expenses.
No, personal loans are usually unsecured, so you don't need to provide any collateral or security.
Criteria usually include being a salaried or self-employed individual, meeting the minimum income requirement, having a stable job, and a good credit score.
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