Unlike most types of loans, personal loans may be used for any legal purpose. Although these financing options may be little expensive, borrowers do not have to pledge any collateral against these loans.
Here are three circumstances when choosing a personal loan is a prudent choice.
Paying for a wedding
When you have to meet large financial objectives like wedding expenses, choosing a quick personal loan is advisable. You may consider funding these expenses using your credit cards. However, if you are unable to pay the outstanding bill during the next payment cycle, you will need to pay finance charges. Using a personal loan where the interest rate is lower than the credit card is a more cost-efficient option.
Refinancing student loans
Several students fund higher studies through student loans. The interest on these loans may be expensive. Since personal loan uses are not limited, refinancing student loans with this type of financing may be considered. However, before choosing to refinance, it is important to check for prepayment charges with the existing lender. Furthermore, you would need to pay processing fees on the personal loan. All these charges increase the overall cost of borrowing. Therefore, calculating the actual interest savings before refinancing is important to ensure you make the right decision.
Funding a purchase
You can consider a personal loan for self-employed to fund any necessary purchase. Moreover, if the purchase would be made using financing (from the vendor), opting for a personal loan may be more cost-efficient. This is because vendor ties up with lenders, which may increase your cost of borrowing. However, before making this decision, you must get the vendor’s offer and compare it with the personal loan to make an informed decision.
You may also avail of a personal loan for a holiday to fulfil your dream vacation or even to renovate your home. Personal loans are versatile and therefore, researching online about various options before finalizing is crucial. There are few lenders in the market like Capital First, Mahindra Finance and Fullerton India whom you can check out for instant personal loans.