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A Personal Loan Can Save You in an Emergency:
Money is in shortage but emergencies are not. Murphy’s law waits for no one. “If anything can go wrong it will”. It’s in such emergencies that you need a personal loan.
A personal loan is unique as the bank does not ask you the purpose of availing the loan. You can avail this loan for a medical emergency, to buy a consumer durable or for a marriage. You can also avail a personal loan to pay back a borrowed loan or take a foreign holiday.
You also don’t need to give collateral (security) when you avail this loan.
Need for a personal loan:
You need to decide if you need to avail a personal loan or not. If you are short of money for a medical emergency or a marriage availing a personal loan is a must.
If you avail a personal loan to go on a foreign holiday then you need to remember that repaying this loan may not be easy as it charges an interest of 14-17%.
If you are unable to repay the personal loan and default on it then your Cibil score is affected. You will not be able to avail any other loans especially a home loan when you need it the most.
Use the personal loan as a stepping stone:
A home loan is very important and you can use a personal loan to help you secure that dream house. When you purchase a home you need to make a down payment (say 10-20%) of the cost of the home.
You can then avail a home loan for the remaining amount. You can avail a personal loan to make the down payment for a home loan. It serves as a stepping stone to your dream home.
Who takes these personal loans?
These loans are availed if you live in a tier 1 or 2 city or a metro. If you live in a city you generally avail a personal loan of 1-2 Lakhs to meet any emergencies. In a metro you need to avail a personal loan of 3-4 Lakhs as living expenses are high.
A personal loan is generally availed by those who are young and just starting their careers. If you are 25-30 years of age you would avail a personal loan.
These loans are then used to buy goods of personal aspiration such as the latest mobile phone or a high end laptop even though interest rates on a personal loan are high.
You need to be responsible when availing a personal loan. The bank places the responsibility of repaying the loan without any hitches squarely on you.
Avail a personal loan only in an emergency.
Banks have tightened their belts:
Banks sanction your personal loan only if you have a steady job. Banks do not want to suffer losses as these loans are given without any security.
If you avail a personal loan from the bank where you have an account it is easier to get a personal loan. You can also get the benefit of a lower interest rate.
Always avail a personal loan responsibly.
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