When it is a good time to get a Personal Loan ?

When it is a good time to get a Personal Loan ?

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Personal loans can be your best friend and can help you to tackle any financial distress, especially in times of emergency. The fact that you don’t require any collateral or security to apply for a personal loan makes it the best resource for funds. Along with that, you can avail the loan in as quick in a few hours. Thus, it can be your emergency fund as well as. Here are some situations when it is good to take a personal loan. People can also apply for personal loan at the same time.

When should you take a personal loan?

A home loan is taken for the purchase or construction of the house. A loan against property is taken against the mortgage of the property to meet personal as well as business needs. A gold loan, on the other hand, can be used for meeting short term as well long term personal and business needs against the mortgage of gold. Talking about a personal loan, it is an unsecured loan and does not require any collateral. However, because of the same reason, the rate of interest on a personal loan is generally higher. Still, you can consider a personal loan in the following situations:

Situations when it is good to get a Personal Loan?

  1. Debt consolidation: If you have multiple credit cards and you are finding it challenging to repay the outstanding dues on your card, you can take a personal loan to clear the dues. However, you must make sure that you don’t over utilise the credit cards once you have paid some of the dues on your card. Taking a personal loan is a better idea because the annual percentage rates on the credit card are higher than the rate of interest on the personal loan.
  2. In case of emergency: There are times when health insurance cannot entirely look after your medical expenses, savings cannot help you to manage your wedding budgets, and emergency funds for house repairs knock your door. It is when a personal loan can be suitable for all your finance requirements. With instant personal loan applications such as Cashe, Early Salary, Kreditbee etc. you can get credit in your bank accounts in a few hours.
  3. Improving your credit score: Taking a personal loan can help you to adjust the credit score in the three ways. Firstly, as you know that having a debt mix can help you to improve the credit score, thus if you are using the credit cards, a personal loan can improve your credit score. Secondly, taking a personal loan will also improve the credit utilisation ratio, thus further impacting the credit score positively. Finally, if you repay the loan on time, your credit score will surely improve.
  4. Personal loan for educational expenses: Student loans or educational loans are an ideal choice for financing education. It may be possible that you are not able to avail those due to lack of time or other circumstances. In such possibilities, you can take a personal loan to get finance for your education. A personal loan for educational needs is most suitable at the time of higher education when you require quick funds for getting admission in college. As a personal loan can be availed quickly, you can finance the fees of your college.
  5. Finance for a big purchase: You can also use a credit card to make a big purchase such as buying a laptop or camera etc. However, the rate of interest for a credit card may be higher for a personal loan. Thus, you can take a personal loan to get finance for big purchases.

Read more: Pros and Cons of sanctioning personal loans from licensed money lenders

Conclusion: To get a personal loan at the best rates, you must compare the prices of different lending institutions.

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