Personal Loans for Different Purposes

Come the wedding, a trip, education or even a medical emergency, we are often found short of having the required bank balance to meet these needs. It feels awful, especially when dealing with a medical emergency. Don't be unaware of loan options such as a personal loan that you can get without any collateral. It's an unsecured loan offered by banks and non-banking financial companies (NBFCs) to both salaried and self-employed for various purposes. We will discuss all that and more here. Keep reading!

What is a Personal Loan?

A personal loan is an easy loan to meet various needs. The disbursal of a personal loan, however, depends on your income, credit score, repayment obligations, location, job profile, etc. Banks and NBFCs evaluate personal loan eligibility based on these factors. 

Greater income, a credit score of 700 and above, less to zero debt obligations, a sound job profile, and having a residence in a good area can land you a personal loan without any hassle and at attractive interest rates. The rates typically range from 10-25% per annum.

Personal loans are disbursed post the deduction of processing fees calculated at around 1-2% of the loan amount plus taxes. 

So, if you apply for a personal loan worth INR 6 lakh at a processing fee of 1%, how will the loan disbursal be? 

The processing fee at 1% of your applied loan amount I.e. INR 6 lakh will be debited. 1% comes as INR 6,000. 

Adding 18% GST to the same takes the overall processing fee to INR 7,080. 

This will be debited from INR 6 lakh. 

You will get the resultant amount worth INR 5,92,920 (6,00,000-7,080) in your bank account. 

The irony is the EMI will apply to INR 6 lakh and not INR 5,92,920. 

Strange, but this is how a personal loan works.

Personal Loan Purposes Discussed 

People often ask online - can they get personal loans for any purpose? Yes, they can, but they will need to specify the same while filling in the personal loan application form online or at the branch. Let us discuss personal loans for different purposes. 

Personal Loan for Marriage

Come wedding, come tall lists of guests, events and expenses. Amid inflation, it's not easy for many to accumulate the required savings to take stock of the wedding expenses. 

A carefully chosen personal loan at attractive interest rates will land you the sum required for a grand wedding ceremony. 

However, since we Indians attach so much emotion to the wedding event, we must be saving for this event. We are sure you must be doing the same too. 

However, in case that does not suffice alone, combine it with a personal loan at a lower interest rate.

Travel Loans are on the Rise

India's youngsters increasingly prefer travelling to countries like Sri Lanka, Thailand, Japan, US and other countries on a loan. IT professionals aged 30 and around are exploring the world on a personal loan. As per reports, India's INR 25,000 crore loan portfolio will expand at a rapid pace in 2024 and beyond owing to the growing inclination for overseas travel among India's youth. 

No matter how tempted you may be to take a personal loan for travel, think about it twice. As travel is more of a want than a need, check how much an impact a personal loan will have on your finances. 

Here, it's even more crucial to shop your loan carefully. Negotiate with the lender for the best personal loan interest rates. 

Education 

Your children are your jewels. Don't let your inadequate savings harm their lives. We understand that unforeseen circumstances might have reduced your savings drastically. There are basically two options - Education Loan and Personal Loan - that you can avail of. 

However, education loans beyond INR 7.5 lakh often come with collateral such as a fixed deposit, national savings certificate or other fixed return-bearing instruments. 

That being said, the disbursal of education loans also depends on the institute to which your kids are going to study.  

In case your kid secures admission at an institute not so high on the meritorious list, banks might deny you an education loan. 

In that case, you can opt for a personal loan to let your children study without any hassle.

Medical Loans are Often Called for

Medical emergencies come uninvited. So, you need to be prepared financially to deal with the same. One way to do this is by buying health insurance at the earliest. It covers many ailments for a premium you need to pay either monthly or annually. However, health insurance does not cover you for a disease you may have before buying a policy for around 2-4 years. At the same time, there's an initial 30-day waiting period for the commencement of health insurance coverage. Although in health insurance vs medical loan, you should always choose the former over the latter.  However, in certain situations like those discussed above, you may have to take a personal loan. 

Paying Off the Credit Card Debt with a Personal Loan

Shopped too much with your credit card and have piled on the debt at an alarming interest rate of 30-40% per annum? Think about wiping off with a personal loan at half the rate. Pay the credit card debt instantly with a personal loan and pay the latter's EMIs on time to maintain a strong credit history. 

Wrapping Up

Personal loans have been the saviour for some and a wish fulfilment tool for others. What matters as an individual is how quickly you access it at the best interest rates. Compare the best personal loan offers online to fulfil your emergency needs or wants. For more such insights on finance and other matters, visit zarooribaathai.in.