A personal loan is an unsecured loan that can be used for absolutely anything and everything under the sun.In this article we will tell you how a Personal Loan could probably be the best thing that has ever happened to you.
Let’s suppose you have multiple credit cards and all of them have racked up maxed out charges. What do you do then? Simple, opt for a Personal Loan. Not only do they require minimum documentation, but will also give you a considerable lower rate of interest with respect to annual percentage rates (APR) on your credit card.
Purchasing a Home
Another example of wise Personal Loan usage is purchasing a home. A personal loan can be taken out to be used as down payment or to help cover other expenses, like closing costs, etc. A personal loan taken for a home purchase is a good investment because it also helps build your credibility and equity with the bank. Additionally, once the loan is fully paid, the home becomes an asset.
Paying for a wedding
Everyone around the world is aware of Big Fat Indian Weddings! We love our weddings as much as we love our food. And, since weddings are a grand and expensive affair it can be advised to opt for a personal loan to help finance it. Not only would the interest rates be lower in comparison to let’s say credit cards, but repaying a personal loan is far more easier and will help build your credit score.
Improving your Credit Score
A personal loan helps your credit score in three ways.
1. If your credit report shows mostly credit card debt, a personal loan might help your “account mix.” Having different types of loans is often favourable to your score.
2.It lowers your credit-utilization ratio—the amount of total credit you’re using compared to your credit limit. The lower the amount of your total credit you use, the better your score. Having a personal loan increases the total amount you have available to use.
3.And paying back the loan on time is, of course, always good for your credit score.
There are plenty of other ways in which you can use a personal loan like refinancing your student loans, paying off medical bills, buying a car, etc.
Personal Loans can be extremely useful when if your time of need, but it is always wise to consult with a trusted financial advisor before opting for one.
Learn more about your Personal Loan Eligibility here.
* Terms & conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
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