When a financially unstable time hits like that of the economic recession induced by the unprecedented COVID-19, we tend to get loans to manage our finances. When we need to pay for a medical emergency, education, or wedding, we resort to loans to avoid dipping into our savings or investments.
Personal loans online are unsecured, big-ticket loans provided to salaried and self-employed individuals by money lending institutions. Personal loans online are easy to get and have lower interest rates as compared to credit cards. Since a personal loan is unsecured, there is no requirement of pledging any asset as collateral.
It also serves multiple purposes, and there are no restrictions on the end-use of the loan amount. However, some factors impact your personal loan application, like your level of income, credit history, and repayment capacity. Individuals with a good credit score are usually warranted approval and value-added features.
Personal loans go a long way in not just meeting unexpected financial needs, but also in saving you money in the long term. Here are five tips to save money with a personal loan.
5 Tips That Personal Loans Can Help You Save Your Money
If you have taken multiple loans from different channels like medical loans, loans for home/car down payments, or credit cards, you have already compromised your budget and exposed yourself to penalties. Debt consolidation means that you can consolidate all your high-interest debts into one large and low-interest personal loan.
The benefit of consolidation is that you can avoid paying high interest on your student loan or credit card bills. Instead of having multiple interest rates to pay, you can choose to focus your energy on one interest by taking a personal loan. The personal loan interest rates in India are usually lower than credit cards.
Credit score improvement
Another benefit of taking a personal loan is that it can diversify your credit type, which improves your CIBIL score. If you have maintained a healthy credit score, you always have an upper hand in negotiating personal loan benefits.
For instance, you have greater chances of getting your loans approved. You can borrow a maximum loan amount and avail of attractive personal interest rates in India.
Not all purposes of personal loans online can get you tax benefits. However, if you are taking a personal loan to renovate your home or to make a down payment, you are eligible to claim the benefit of tax deduction of up to Rs. 2 lakhs under section 24B. You will need to furnish proper receipts and documents to your lender to avail of the tax benefits.
Well-informed repayment plans to save money
Personal loans online offer multiple repayment plans as per your needs and preference. However, a well-informed plan ensures you great benefits. You have the option to repay the loan amount along with interest, but if you have the financial flexibility, you can repay it in 24 months.
It is a great strategy to save money in the long run which would have gone towards paying personal loan interest rates in India.
Helps finance a one-time big expense
When you have to take an international trip or manage your or a loved one’s wedding, you find yourself in need of cash for a large one-time expense. In such cases, a personal loan can be the most inexpensive and practical way to borrow money.
It is probably the best option to finance your big-ticket items. Since there are no restrictions on the end-use of the loan amount, you can use a personal loan to pay for an expensive vacation, wedding, or one-time medical procedure.
It would be wise to take personal loans online for your needs. If you decide to get a loan for a want, calculate your EMIs to check your affordability. You can ascertain your EMI amount using a personal loan EMI calculator.
Personal loans can not only help you with immediate financial needs, but you can also save money in the long run through debt consolidation, on-time repayments, and availing of tax benefits. Seeking for personal loans online make it easier for you to choose from multiple loans offer from the comfort of your home.
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