When Should You Apply for a Personal Loan?
Here are some of the situations when you can take a personal loan to meet your needs:
Marriage Ceremonies
There are several expenses associated with a marriage. You need to bear the bills and charges of necessary outfits and jewelry for the bride/groom in addition to decoration, photography, catering, etc. A personal loan can give you the much-needed financial assistance to accommodate all these expenses and accomplish a dream-like marriage without difficulties.
Medical Emergencies
You may need immediate access to a lump sum of credit during medical emergencies. If your savings are insufficient, you can take a personal loan. Since no collateral is involved in this credit option, its documentation process becomes short, and financial institutions can quickly verify and approve your loan request. As a result, the lender can disburse emergency financial assistance without delay.
Tuition Fees
You can apply for a personal loan to pay your children’s tuition fees, especially when your savings are exhausted or the expenses of higher studies are more than planned. Furthermore, a personal loan can be an easy alternative to education loans owing to its easy application and documentation process.
Consolidation of Existing Debts
Through a personal loan, you can consolidate all your existing installments. It helps you avoid repaying multiple loans in the same month. After debt consolidation, you will have to pay only the single EMI of your new personal loan to meet all the existing debt obligations.
Bills and Expenses
If your savings dry out in the middle of a month, you can take a personal loan to make ends meet. It will help you get financial success immediately. So, you can avoid liquidating your assets and investments.
Home Renovation
You can get a home loan to purchase or construct a new residential place. However, this financial facility does not let you renovate your existing house. With the credit obtained through a personal loan, you can easily bear the charges of interior designers, pay the price of new furniture and home/kitchen appliances, and adorn your houses with new amenities.
When Should You Abstain from Applying for a Personal Loan
You should refrain from taking a personal loan if the following are your objectives:
Gambling
Taking a personal loan for gambling would be imprudent and unadvisable. There is a chance that you will lose your gamble and, resultantly, the credit. After this, it may become difficult for you to pay installments.
Investment
You should avoid using the money obtained from a personal loan to buy company shares from the stock market. This is because the returns from the stock market are unsure. The price of company shares is highly volatile. You may encounter challenges in repaying your loans if you fail to secure the desired returns. Further, you may end up paying more than you earn due to the outgoing interest. Additionally, you should not take a personal loan without doing proper financial planning for repayment.
What are the Strategies to Repay a Personal Loan Efficiently
You can repay your loan properly by considering the following aspects:
Choose a Suitable Tenure
While taking a personal loan, you need to ensure that you get an installment amount within your financial capacity. If it is higher, you can increase the tenure so that the installment amount remains within your budget. It will help you repay more conveniently without facing financial difficulties.
Make a Separate Contingency Fund
You can also keep a certain amount of your budget aside as an emergency fund for debt repayment. This will help you pay your installments even if you encounter financial challenges, thereby avoiding penalties for missed due dates.
Spend According to Your Budget
After getting engaged in a loan, you should set a budget for all your probable expenses, including your EMIs. You need to strictly abide by the financial planning till the repayment is complete. As a result, you can pay off your installments without difficulties. Now that you understand when you should opt for a personal loan and how you can plan your repayment, you also need to know the application process for this credit facility.
How to Apply for a Personal Loan
Here is a step-by-step process to apply for a personal loan: Step 1: Visit the lender’s website. Step 2: Navigate to the personal loan application section. Step 3: Click on ‘Apply Now’ to get the required application form. Step 4: Fill in the form with the necessary professional and personal details. Step 5: Select the loan amount and tenure of your choice. Step 6: Submit the required documents for verification. After this, you will have to wait for the verification process. When the lender completes this, you will get the loan amount.
Documents Required for the Personal Loan
Following are some of the basic personal loan documents you need to provide to your lender:
Residential Proof: Electricity bill, telephone bill, voter’s ID card, passport, driving license, Aadhaar card, Identity Proof: Aadhaar card, passport, PAN card, voter’s ID card, driving license Income Proof: Salary slips and bank account statements for the last 3 months
Note: Your preferred financial institution may ask you for additional details during the loan application process. A personal loan has no restraint of end-usage, letting you meet any of your financial requirements. However, it is not advisable to take this facility to bear unnecessary expenses like gambling. Instead, you should leverage this loan as your last resort when your savings are insufficient. Otherwise, the monthly installment can risk your financial stability.
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