Top 10 Reasons for Taking Personal Loan in all India
personal loan can help an individual conveniently access additional funds to fulfill money requirements, as such loans can be availed without any security. Further, personal loans can be taken even without specifying any particular end-use, hence are a popular way of financing shortfall of money. Here are the top 10 reasons for taking a personal loan in India:
1. Consolidating Credit Card Debit:
Credit cards can often push individuals to spend more than what they can afford with their monthly salaries, as the luxury of ‘spend now, pay later’ is often too hard to resist. However, credit card outstanding can put cardholder into adversity, if the credit card debt is not managed properly.
This is because the credit cards carry very high-interest rates, and hence, outstanding amounts can magnify quickly due to interest burden. Taking a personal loan to consolidate credit card debt by paying off outstanding amounts on different credit cards can help one rectify earlier financial mistakes and approach the debt systematically.
2. Creating/Improving Credit History
Credit history reflects the pattern of an individual’s credit habits and is built when one takes a loan/credit card. When one has just started their career, no history of loans or credit cards will lead to no credit history and, consequently, no CIBIL score. This can be a tricky issue at a later stage when one is in need of debt for any reason, including home loan, car loan, etc.
When a bank processes a loan/ credit card application, credit score often defines one’s eligibility towards such a loan. Thus, this can emerge as a vicious cycle, wherein no loan leads to no credit history, while a credit history can be created only through an existing loan.
However, personal loans can be availed from the banks and financial institutions based on the recurring monthly income, e.g., salary, etc. Taking a personal loan for a shorter tenure and repaying it in time can help one create a good CIBIL score.
3. Making Tax Saving Investments at year-end
Section 80C of the Income Tax Act 1961 allows a tax deduction of up to Rs. 1.5 lakh from the total income during a year for making certain tax-saving payments and investments. If approached systematically, one can make investments of around Rs. 12,500 per month and avail the tax benefit in entirety. However, many taxpayers tend to delay their tax saving plans till the year-end, which puts a lot of strain on the finances during the last couple of months of the financial year.
So, while one can resolve to make regular investments from next year onwards, taking a personal loan to make tax-saving investments can be a prudent option, as the immediate tax savings can compensate the taxpayer for the interest expenses.
4. Medical Emergencies
In today’s world of high medical costs, medical emergencies can derail all the financial plans and can cause severe financial as well as psychological stress.
Instead, one can take a personal loan to meet such medical expenses, and then repay such loan in monthly installments.
5. Vacation Goals
It is often said, “Life is not a destination to reach, but a journey to be experienced.” Traveling to new locations can often refresh the soul and break the monotony of the routines of daily lives. It is always a financially prudent decision to make regular savings towards such vacation goals; wherein one can aim to accumulate a healthy amount to meet the vacation expenses.
However, in the interim, making advance bookings towards such expenses, especially for flights, hotels, etc., can help you gain a significant price advantage, thereby lowering your overall travel budget indeed. One can take a personal loan for travel to make such advance payments and repaying such loans with regular savings at a later stage.
6. Wedding Expenses
Marriages are made in Heaven but celebrated on Earth. And we all tend to splurge quite a bit on the festivities.
With an intent to celebrate in the grandest manner, marriage expenses can often go off-budget. Instead of facing financial stress about this, one can take a personal loan for marriage expenses and then systematically repay the loan in monthly installments.
7. Funding a new business
A new business often needs certain seed capital to conceive and show its physical presence before it can invite equity and debt funding from investors and financial institutions, respectively.
Since personal loans can be availed with fewer hassles and even in the absence of collateral, availing such loans can be an accessible mode to make investments into a new business. So, if you have an idea, make it a reality with a personal loan to start with.
8. Financing Big-ticket Purchases
One can avail of a personal loan to fund any big-ticket purchases like electronic appliances and gadgets eg. laptop, refrigerator, washing machine, etc.,
This is a prudent option as compared to spending large sums in a month A personal loan allows one to defer the large expenses over future months since it is to be repaid in monthly installments in the future.
9. Higher Education
While you may have prioritised your child’s career aspirations and making regular savings towards it, the ever-increasing education costs may cause some deficit towards such financial goals.
One can take a personal loan to bridge such deficit and enable their child to get admission into the desired college and stream, not allowing any financial constraints to alter such goals.
10. Home Renovation
One often spends a significant amount of time with family at home. Getting a home renovated can often be one’s desire, but relatively higher expenses may cause one to push it down the priority list.
A personal loan can help one make this desire a reality, wherein the home renovation expenses can be funded through such loan to be repaid in monthly installments.
These are the Top 10 reasons for taking personal loan in India.
personal loan can help an individual conveniently access additional funds to fulfill money requirements, as such loans can be availed without any security. Further, personal loans can be taken even without specifying any particular end-use, hence are a popular way of financing shortfall of money. Here are the top 10 reasons for taking a personal loan in India:
1. Consolidating Credit Card Debit:
Credit cards can often push individuals to spend more than what they can afford with their monthly salaries, as the luxury of ‘spend now, pay later’ is often too hard to resist. However, credit card outstanding can put cardholder into adversity, if the credit card debt is not managed properly.
This is because the credit cards carry very high-interest rates, and hence, outstanding amounts can magnify quickly due to interest burden. Taking a personal loan to consolidate credit card debt by paying off outstanding amounts on different credit cards can help one rectify earlier financial mistakes and approach the debt systematically.
2. Creating/Improving Credit History
Credit history reflects the pattern of an individual’s credit habits and is built when one takes a loan/credit card. When one has just started their career, no history of loans or credit cards will lead to no credit history and, consequently, no CIBIL score. This can be a tricky issue at a later stage when one is in need of debt for any reason, including home loan, car loan, etc.
When a bank processes a loan/ credit card application, credit score often defines one’s eligibility towards such a loan. Thus, this can emerge as a vicious cycle, wherein no loan leads to no credit history, while a credit history can be created only through an existing loan.
However, personal loans can be availed from the banks and financial institutions based on the recurring monthly income, e.g., salary, etc. Taking a personal loan for a shorter tenure and repaying it in time can help one create a good CIBIL score.
3. Making Tax Saving Investments at year-end
Section 80C of the Income Tax Act 1961 allows a tax deduction of up to Rs. 1.5 lakh from the total income during a year for making certain tax-saving payments and investments. If approached systematically, one can make investments of around Rs. 12,500 per month and avail the tax benefit in entirety. However, many taxpayers tend to delay their tax saving plans till the year-end, which puts a lot of strain on the finances during the last couple of months of the financial year.
So, while one can resolve to make regular investments from next year onwards, taking a personal loan to make tax-saving investments can be a prudent option, as the immediate tax savings can compensate the taxpayer for the interest expenses.
4. Medical Emergencies
In today’s world of high medical costs, medical emergencies can derail all the financial plans and can cause severe financial as well as psychological stress.
Instead, one can take a personal loan to meet such medical expenses, and then repay such loan in monthly installments.
5. Vacation Goals
It is often said, “Life is not a destination to reach, but a journey to be experienced.” Traveling to new locations can often refresh the soul and break the monotony of the routines of daily lives. It is always a financially prudent decision to make regular savings towards such vacation goals; wherein one can aim to accumulate a healthy amount to meet the vacation expenses.
However, in the interim, making advance bookings towards such expenses, especially for flights, hotels, etc., can help you gain a significant price advantage, thereby lowering your overall travel budget indeed. One can take a personal loan for travel to make such advance payments and repaying such loans with regular savings at a later stage.
6. Wedding Expenses
Marriages are made in Heaven but celebrated on Earth. And we all tend to splurge quite a bit on the festivities.
With an intent to celebrate in the grandest manner, marriage expenses can often go off-budget. Instead of facing financial stress about this, one can take a personal loan for marriage expenses and then systematically repay the loan in monthly installments.
7. Funding a new business
A new business often needs certain seed capital to conceive and show its physical presence before it can invite equity and debt funding from investors and financial institutions, respectively.
Since personal loans can be availed with fewer hassles and even in the absence of collateral, availing such loans can be an accessible mode to make investments into a new business. So, if you have an idea, make it a reality with a personal loan to start with.
8. Financing Big-ticket Purchases
One can avail of a personal loan to fund any big-ticket purchases like electronic appliances and gadgets eg. laptop, refrigerator, washing machine, etc.,
This is a prudent option as compared to spending large sums in a month A personal loan allows one to defer the large expenses over future months since it is to be repaid in monthly installments in the future.
9. Higher Education
While you may have prioritised your child’s career aspirations and making regular savings towards it, the ever-increasing education costs may cause some deficit towards such financial goals.
One can take a personal loan to bridge such deficit and enable their child to get admission into the desired college and stream, not allowing any financial constraints to alter such goals.
10. Home Renovation
One often spends a significant amount of time with family at home. Getting a home renovated can often be one’s desire, but relatively higher expenses may cause one to push it down the priority list.
A personal loan can help one make this desire a reality, wherein the home renovation expenses can be funded through such loan to be repaid in monthly installments.
These are the Top 10 reasons for taking personal loan in India.
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ReplyDeleteIn India, personal loans, including those from services like FlexSalary, are popular for diverse reasons. From managing medical emergencies to consolidating debts, funding education, or planning dream weddings, personal loans offer financial flexibility. With services like FlexSalary, accessing quick funds becomes even more convenient, addressing the varied financial needs of individuals across the country.
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