1. Personal Loans Can Help Consolidate High-Interest Debt
The more practical the use is, the better and more useful something can be to a person, in this case a loan, is for consolidation and personal loans can help with that as well. Many people have a few credit cards and at least one small loan.
Personal loans help you combine outstanding debts and pay lower interest for each month. Consequently, it will ease the burden of paying back the loan while saving money over time.
👉 Extra Perk: You reduce the number of associated deadlines while decreasing interest payments, thus taking the stress off yourself.
2. Establishing and Advancing Your Credit Score
If you don’t have a robust credit history, taking a personal loan and paying it off on time will help you establish creditworthiness. The same goes for those who have a poor credit score; a personal loan will help you if managed correctly.
Banks and lenders inform credit bureaus of each on-time payment increasing the score over time. As a result, you will have access to better loans, higher credit limits, and lower interest rates.
👉 Extra Perk: A personal loan is not only for accessing money; it is an also an important tool for financial credibility.
3. Skill Development and Education Funding
Personal loans can also be used for educational purposes and are not confined to any particular institution as is the case with student loans. Personal loans can be used for online international and professional workshops and other short term online certifications.
Personal loans are also beneficial for busy professionals who want to improve their skillsets as they do not have rigid loan infrastructures.
👉 Hidden Benefit: A personal loan can also become an investment for future career progress for better and higher paying jobs.
4. Lifestyle Upgrades and Renovation of Home
Many families want to improve their homes but are confined to financial limits. Personal loans help you do home renovations and add new furniture without the need to use savings.
A personal loan does not need to be used for buying a property and can be used for minor constructions. This is unlike home loans. With a personal loan, you can do a lot of things such as add a home office to your house or a modular kitchen.
👉 Added Value – With a personal loan, you can make an immediate payment and enjoy the comfort of your dream house for the rest of the payment period, without having to wait until your lifestyle allows for additional expenses.
5. Memorable Experiences and Destination Weddings
Indian weddings are extravagant and costly. Many families burn through their lifetime savings or sell off assets. With a personal loan, you can avoid the stress of finances and plan for your dream wedding.
Personal loans can also be used to sponsor international travel, anniversaries or a cruise vacation. The informal nature of loans and the quick approval make it a suitable option.
👉 Added Value - Financial sacrifices are not a prerequisite for creating memorable experiences, you can borrow money and repay it later when it's convenient for you.
6. Financing a Startup or Side Project
In the early stages of a startup or side project, not many individuals can obtain venture capital or a business loan. A personal loan can make a difference in situations like these.
Personal loans can help you fulfill your entrepreneurial dreams, be it covering the initial advertising costs, buying equipment for freelancing or starting a small e-commerce venture.
👉 Added Value - A personal loan can be used to quickly put the plans in your business idea, instead of having to wait for months to get approval for funds.
7. Tax Benefits in Special Cases
By themselves, most personal loans do not generate tax deductibles, but a loan can benefit you in tax savings. For example:
- When a personal loan is taken for home renovation or purchase, the interest portion is claimable under section 24(b) of the Income Tax Act.
- if the personal loan is taken for investment in a business or assets, the interest, under certain circumstances, can be claimed as a business expense.
👉 Hidden Benefit: Tax liabilities can be minimized as a result of personal loan.
8. Emergency Fund for Future Security
Affording a personal loan is helpful, even if you do not currently go through a financial crisis. Personal loans, especially for freelancers or self-employed professionals with erratic earning patterns, offer instant money, especially, without selling any assets.
👉 Hidden Benefit: Personal loans can act as a buffer in case of personal loan repayment.
9. Medical Procedures Beyond Insurance
More often than not, people tend to avail themselves of personal loans for emergencies but they can come in handy for planned medical procedures not covered by insurance. Such procedures are cosmetic surgery, dental surgery, fertility treatment, and several wellness therapies.
👉 Bonus Perk: Personal loans can assist you in receiving better medical care than what your insurance will pay for.
10. Gifts and Family Assistance
Sometimes, financial assistance is not for you, it is for your family. A personal loan can help you pay for your child’s education, help your parents with their medical expenses, or even gift them a holiday they would love.
👉 Bonus Perk: The emotional satisfaction gained by meeting family needs without touching your primary savings is a strong motivator.
11. More Flexibility Compared with Other Loans
A personal loan is not like your home loan, your car loan, or your education loan. Much like those other loans, personal loans also have their restrictions, however, in the case of personal loans, there is the greatest flexibility in how the money can be spent. The lack of strings attached is one of the best-kept secret features of a personal loan.
👉 Bonus Perk: The versatility of personal loans is attributed to their freedom of use.
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