Taking a personal loan in India has come a long way, and it’s never been simpler than it is today. The industry has evolved to cater to the ever-changing needs of consumers by providing better services. With attractive interest rates, paperless procedures, flexible tenures, and fast disbursal, personal loans are the perfect solution for improving your lifestyle or financing in times of an emergency.
Personal loans can be availed for a variety of reasons, and some firms even customize the terms offered for specific cases. Home loans, car loans, and education loans are all examples of personal loans. However, you can also take a general personal loan for other reasons, such as debt consolidation or financing your dream vacation.
Read on to find out why a personal loan can benefit you as a salaried employee.
Keeps Finances Steady
Getting a regular, steady paycheck from your job is great- you know you’ll be paid by the start of every month, and your monthly budget tends to remain quite fixed because of your regular salary.
However, your current salary isn’t likely to remain the same indefinitely. Changes in one’s personal life or external circumstances can cause a subsequent impact in your income. If the economy plummets and you’re suddenly without a job, your savings might not be enough to meet your expenses till the time you find a new position. If you’re the sole provider of your household, it will increase the stress of ensuring ends are met for you and your dependents.
Or, you could be stuck in a dead-end job without any advancement opportunities, raises, and bonuses. When you consider inflation over time, your monthly income will only go so far after a point. Personal loans are useful for situations like these when your finances need a little boost.
Stay Prepared for Unexpected Emergencies
Most of us have a fair amount of predictability in life, from our daily routine to receiving a steady paycheck every month. Therefore, when minor financial inconveniences occur in our day-to-day life (such as running late in the morning and having to take a cab to work, instead of public transport), it usually doesn’t cause a significant amount of stress or disruption to our budget.
On the other hand, emergency events often leave us underprepared and vulnerable to them for the same reason. There is a sudden rise in stress and uncertainties, and there is a significant financial burden that often comes with it. Serious unexpected emergencies such as medical expenses can require a lot of money to take care of it, and usually, this large sum of money is required upfront- which is cash you may not have on hand.
This is one of the best cases where personal loans are highly useful to an average person. Instead of having to dip into your savings, break investments, or borrow from other people, personal loans can be disbursed to your account in less than two days- saving you the hassle of arranging urgent funds from elsewhere.
Build or Improve Credit Rating
The benefits of taking a loan goes beyond just receiving some quick cash that you slowly pay off over time. Availing formal credit from a bank or non-banking financial company (NBFC) comes with credit score implications, which you can leverage to your advantage.
Your credit score is derived from the details about your credit history, including the amount you borrowed and your repayment behaviour. Credit scores such as CIBIL are a critical component that lenders use in order to assess an applicant’s creditworthiness.
When you take a loan, you not only have the opportunity to increase your creditworthiness, but also enhance your fiscal consciousness. The obligation of paying your monthly EMIs on time compels you to seriously monitor your finances and make responsible money decisions.
In turn, your timely repayment behaviour is recorded on your credit history, which and boosts your credit score! By proving your creditworthiness and fiscal responsibility, lenders will offer you better interest rates and repayment tenures for loans. This is highly useful, should you decide to take out a large home loan in the future, or avail an education loan for your children.
At some point in time, we’ve all borrowed sums of money from friends and family and repaid it back. But perhaps due to circumstances, you borrowed large amounts from more than one person, and now, they all want their money back ASAP; except, you don’t have a huge pile of cash to pay them all back immediately.
Many people carry some level of debt that is owed to various lenders and credit cards. Additionally, many people can have several thousand rupees in credit card debt, as well as EMIs for home loans and education loans- and also money owed to other people!
Personal loans are the perfect option for debt consolidation. Instead of simultaneously repaying several lenders, you could take a personal loan for the total outstanding amount you owe. You’ll then only have to pay a monthly EMI to the debt consolidator, and use the loan amount to clear your multiple outstanding payments in one go.
If you’re in a similar situation, taking a personal loan for debt consolidation will eliminate all the stress and hassle of repaying several people and lenders. The added benefit of taking personal loans for debt consolidation is that they provide an opportunity to make amends to the people you’ve borrowed from and repair the damaged relationship.
Enjoy Important Life Moments
Life is easier when you have the financial resources you need. Actually being able to enjoy life, doing the things you want to do and spending it with your loved ones is the primary driving force for why we all want more money.
We can all think of at least one time when we’ve had to sacrifice attending a special event or purchasing something because we lacked the means for it. And if one’s financial situation isn’t in good shape, spending money on any of these things is completely out of the question.
In India, occasions like festive holiday celebrations, family functions and weddings aren’t just important (and unavoidable!)- they’re expensive. As a matter of fact, wedding loans in India are quite commonly availed by people from all backgrounds.
We all know life is too short to keep postponing things for a future date that will probably never happen. Those special, spontaneous moments and impromptu plans are what make our lives meaningful; and more so in adulthood when things like vacations and short trips are a rare occurrence.
Avoid deferring your joy in the present with the knowledge that financing options are easily available for all needs; instead, live with more happiness and freedom and happiness that you’ll always be able to make a spontaneous plan!
Low EMIs Are Budget-Friendly
Personal loans can actually fit quite easily into your monthly budget. Many people who have never taken a loan are afraid of doing so because of the potential strain it will add to their finances, believing that the monthly EMI will be burdensome and hard to repay.
Contrary to this perception, EMIs can actually fit very nicely into one’s monthly budget. In fact, at Upwards, EMIs for a personal loan of Rs. 1 lakh can be as low as just Rs. 2517 per month! As you can see, an EMI doesn’t add significant burden to one’s finances. Therefore, it can put you at greater ease to know that your loan repayment won’t destroy your bank balance.
One thing that does put a strain on your bank balance is the number of repairs and maintenance work that come with owning personal belongings of any sort. From big-ticket items like homes and vehicles, to smaller items such as electronics and appliances, it’s inevitable that these things will require some form of repair, maintenance, or even upgrade. What’s more is that these requirements are regular and frequent throughout the year, and not having the means to take care of them inconveniences your daily quality of life.
All these repair costs come with a pretty price tag- but what doesn’t is an EMI! You can take a loan for repairs and upgrades for as low as Rs. 15,000. With a personal loan, all your routine repairs and maintenance payments can be batched together to save time and prevent the chance of your belongings breaking down suddenly.
No Collateral Required
Back in ancient times, if you needed to borrow some money, you would approach a moneylender who would take some of your valuable possessions as security, in case the your business venture failed or if you were to default on repayments. This is arrangement is known as a secured loan, in which the borrower provides collateral i.e., their assets, in exchange for their loan.
These days, banks and lenders still offer secured loans since it protects them from a borrower’s default on repayments. The loans could be provided in exchange for the title ownership of assets, such as home, property, vehicle, or other assets.
Most of us don’t have sufficient collateral in the first place to pledge against while taking a secured loan; and if we did, probably wouldn’t want to anyway. This is why modern day new-age lenders offer unsecured loans. Instead of providing your assets as security, lenders are willing to offer loans to people in need of financial assistance. If you’re a salaried individual receiving a steady minimum wage in your bank account every month, you have a good chance of being eligible for a loan from most lenders!
The process of getting a personal loan these days is easier than it has ever been; with just a few documents and personal details, you can get a loan right to your bank account without the paperwork and time-consuming approvals.
Whatever your financial requirement, personal loans are an excellent option to meet expenses without causing a lot of disruption to your budget or lifestyle.