Unlock Financial Freedom: Top 8 Reasons to Consider a Personal Loan

What is a Personal Loan?   

A personal loan is a type of unsecured loan offered by banks or financial institutions to help individuals meet their financial requirements. While a secured loan requires collateral, personal loans do not require any collateral, making them a convenient option to access funds. The loan is repaid in fixed monthly installments over a predetermined period, with interest rates based on the borrower’s creditworthiness and income. 

This blog explores the top 8 reasons to get a personal loan. 

Common Reasons for Taking a Personal Loan  

Personal loans are a convenient option to access funds for varied expenses from weddings to home renovation. We have stated a few common reasons to choose a personal loan: 

Emergency Medical Expenses:

One can face a medical emergency and require immediate funds to cater to all the associated expenses. During such instances, it is better to opt for a personal loan instead of digging into one’s savings. Be it an accident, surgery, or any other illness, a personal loan can cover all the expenses and give you instant financial relief during such times. 

Home Renovation or Repairs:

When you renovate your home, it can have a significant financial impact. Be it upgrading your kitchen, making structural changes, or giving your living space a fresh look. Instead of depleting your savings, a personal loan can be a smart choice. A personal loan can provide the necessary funds to cover renovation costs, which allows you to enhance your home while maintaining financial stability. 

Debt Consolidation:

If you have to manage multiple debts with varying interest rates, it can be quite overwhelming and costly. Utilising a personal loan for debt consolidation is a smart way to simplify your finances. It allows you to combine all your debts into a single loan with a potentially lower interest rate. This makes it easier to manage repayments and save money in the long run. 

Wedding Expenses:

Weddings can be an expensive event that can put a strain on one’s finances. They can opt for a marriage personal loan to cover all the wedding-related expenses, to effectively manage their finances. This gives one the cushion to take care of the expenses with repayment spread over the agreed-upon tenure.  

Travel Costs:

When planning for a holiday, the travel costs can significantly add up. Opting for a personal loan to cover the travel costs like accommodation, flight tickets, shopping, and adventure activities, is a smart option to manage the expenses. 

Also Read: 20 Best Places to Visit This New Year with a Travel Loan

Unique and Overlooked Reasons for Personal Loans  

Personal loans can be taken to fund education expenses, business costs or even to purchase an expensive gadget: 

Starting a Small Business: If you need to buy inventory, and equipment or spend on marketing or other such business-related expenses, those can be covered by taking a personal loan. 

Higher Education: Pursuing a professional course abroad or funding your child’s higher education costs like accommodation, tuition fees or other related expenses can be covered under a personal loan. 

Tech or Gadget Upgrades: Be it upgrading your new laptop or getting the latest phone, you can choose a personal loan with flexible repayment options to cover the cost. 

Benefits of Using a Personal Loan for Specific Needs  

While a personal loan offers a quick and hassle-free online application process, it also comes with a range of other valuable benefits, such as: 

Lower Interest Rates Compared to Credit Cards: Personal Loans have lower interest rates compared to credit cards. Personal loans often come with a fixed interest rate. This ensures that the interest rate remains constant throughout the loan term, making personal loans a smart borrowing option. On the other hand, credit cards usually have more charges such as annual fees, cash advance fees, late payment fees, and over-limit fees. Credit card interest rates are typically variable, which means they can fluctuate based on the market or changes in the cardholder’s creditworthiness. This variability in interest rate makes it a bit tough to assess the overall cost of borrowing with a credit card. 

Quick Disbursement of Funds: Personal loan lenders like Zype, offer instant loan disbursal, making it a convenient loan option. With Zype, you need to fulfil basic eligibility criteria and complete a quick application to get a loan. Once the application gets approved, the loan is directly deposited in the borrower’s account. 

Things to Consider Before Applying for a Personal Loan  

If you plan to apply for a personal loan on Zype, consider these factors: 

Eligibility Criteria: When comparing lenders, check their eligibility criteria and ensure you fulfil them before you apply for a personal loan. Eligibility criteria for a personal loan on Zype include: 1) Age must be 21 yrs and above, 2) Indian citizen with valid PAN and Aadhar card, 3) Salaried with minimum ₹15,000 monthly income. 

Interest Rate: Compare the interest rates offered by different lenders. Choosing a lender with a lower interest rate that aligns with your financial goals is a smart decision. 

Processing Fees: Check for the processing fees charged by the lender. Many lenders may not be upfront about their processing fees. Ensure you know the processing charges before you sign up for the personal loan. Zype charges 2% – 6% of the loan amount. 

Repayment Terms: Check if you can repay the loan without any strain on your finances. Opt for a shorter tenure if the loan amount is higher, to save on interest. If the loan amount is smaller, you may opt for a longer loan tenure. 

Also Read: What is the Processing Fees & Charges for Personal Loan?