From Weddings To Home Renovation: 7 Reasons To Go For Personal Loan

Personal loans have become an indispensable financial tool for consumers to fulfil their immediate needs. They are unsecured loans provided by banks or non-banking financial companies (NBFCs), making them a go-to source of funding for various purposes. While they offer a lifeline in times of need, it's essential to understand when and why people take out personal loans.

Unlike secured loans, such as home or car loans, personal loans don't require collateral. This lack of collateral makes them an ideal choice for those who need immediate funding without risking their assets. With personal loans, you can access a lump sum of money and repay it in fixed monthly installments.

According to the Reserve Bank of India's (RBI) data, the outstanding personal loan amount was ₹40 lakh crore which is a 20.4% increase in 2023 as compared to 2022. Not just this, but there was also a hike in the repo rates from 4.4 per cent to 6.5% in the last one year. Personal loans have certain eligibility criteria that one has to fulfil like being a citizen of India within the age bracket of 21-60 years. The individual also needs to have a regular source of income with at least a 600 CIBIL score.

When to Consider a Personal Loan?

Medical Emergencies: Health issues can strike unexpectedly, and the expenses can be overwhelming. Even with insurance, there might be substantial out-of-pocket costs. A personal loan can provide quick access to funds to cover medical bills and reduce financial stress. An amount anywhere between 15,000 to 5 lakhs with tenure starting from a few months to up to 5 years can be easily availed and help in eliminating medical debt and relieving financial stress.

Weddings: Weddings are a significant milestone, but they can be costly. From catering to decorations and bridal attire, expenses can add up quickly. Personal loans offer the flexibility to finance the wedding of your dreams without restrictions on how you use the money.

Relocation: Moving to a new home is exciting, but it often comes with unforeseen expenses. Whether it's for a job change or personal reasons, a personal loan can help cover the unexpected costs associated with relocating.

Vacation: Everyone enjoys a getaway, but spontaneous trips can strain your budget. Personal loans with minimal documentation can fund your last-minute vacation, allowing you to relax without worrying about your finances. While personal loans can fund vacations with a maximum tenure of up to 5 years.

Home Renovation: Renovating your home can be a costly endeavour. A personal loan can provide the necessary funds to give your home a fresh look, whether for major renovations or simply upgrading fixtures and furnishings. It can be used for home improvement projects, essential repairs, or upgrades.

Educational Purposes: Education costs are on the rise, and you want to provide the best for your children. Personal loans can support tuition fees, books, and other educational expenses while ensuring your child's future is secure.

Gadgets and Electronic Appliances: In today's fast-paced world, keeping up with technology can be challenging. From smartphones to smart home appliances, personal loans offer a way to stay up to date without draining your bank account. Sometimes, you need to buy big-ticket items like computers or appliances, and you don't have the cash upfront, a personal loan can help you make the purchase and pay it off in manageable installments.

Personal loans serve as a financial resource that empowers individuals to overcome multiple challenges. They provide the flexibility and speed necessary to navigate life with ease, offering financial support when we need it most. These loans, although easily accessible, should be seen as a responsible means to achieve financial objectives.

Currently, India stands as one of the fastest-growing major economies in FY22/23 at 7.2% and as per the reports on the web, its bank credit growth increased to 15.8% in the first quarter of the financial year 2023/24 as compared with 13.3% in the first quarter of 2022/23. In an era of constant economic shifts and global challenges, personal loans will prove to remain an important financial tool for citizens.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.