Personal Loan

Is it a Good Idea to get a Personal Loan?

Almost everyone wishes he/she could have enough money to cater for all life’s expenses. However, this is not always the case and in some occasions, you need to borrow funds to keep you going. A personal loan comes in handy to tackle financial constraints and help you attain your goals. Loans have ruined and made many lives so take caution when getting a personal loan. Refrain from applying for a personal loan to fund your vacation, buy a big screen TV, and finance other splurges.

Here are four situations when it is a good idea to get a personal loan.

• Finance Home Renovation

You can take a personal loan to renovate your home and hence increase its value by driving up the selling price. When you need to make various renovations around your home such as adding a pool, renovating the kitchen, or upgrading the living area and do not want to use your savings, you can get a personal loan. You can also use the personal loan to purchase energy-efficient appliances that save you money in the long run.

• To Consolidate Debt

Debt Consolidation

It is a good idea to get a personal loan for debt consolidation. At times, you get to a point where you have several loans from different creditors. Each loan has its interest rate, monthly payment, and due date. It can be overwhelming servicing more than three loans at a go, you get lost in debt, and at times miss payments. To save you the time and energy lost managing different loans, you can opt for a personal loan from licensed moneylenders to pay off your creditors and be left with a single loan.

• Invest in Personal Development

You can take a personal loan to advance your education by taking up professional development courses and learning new skills. Advancing your education will add value to your life by increasing your knowledge and skills and helping you secure a better paying job. Also, you can get a loan to make personal investments such as buying a home or a car. Ensure that you get a loan that you can repay comfortably to avoid loan stress.

• Cater for Medical Expenses

When you are sick and require urgent treatment, a personal loan becomes a great option. Medical expenses are unforeseen and do not happen by choice. Your health is a priority and your productivity is compromised when you are unwell so a personal loan helps substantially. You may need a little boost to pay for your medical expenses so that you can focus on recovering and getting back to work.

The availability of personal loans has resulted in many people taking them for the wrong reasons and ending up in debt they cannot repay. A personal loan can be a good idea and useful when taken for the right reasons and a worthwhile objective. Therefore, take a personal loan only when necessary to do something that adds value to your life. Be wise and shop around for the best interest rates when applying for a personal loan.

4 thoughts on “Is it a Good Idea to get a Personal Loan?”

  1. Avatar of Aakash

    Thank You for providing this good article. I think it based upon the situation, Basically, we take the loan at the bad time. By the way, thank you again for this one.

  2. Avatar of Akhil Arya

    Much obliged to You for giving this great article. I think it in view of the circumstance, Basically, we take the credit at the awful time. Incidentally, thank you again for this one.

  3. Avatar of Bindas Biker

    Hi Suprabhat,

    Good write up! Keep up your good work of educating Indians on money lessons.

    I hate personal loan. It comes with highest interest rate. So if anything that I can plan, I won’t take personal loan. I will arrange the amount from my income source and fund the same.

    I keep emergency fund of 6 months expense. Also I keep 2 years expense in debt mutual fund. So for medical purpose I use my credit cards to pay the bill and then liquidate the debt mf to repay the same.

    But certainly if someone is not as passionate about me in finance life, they should take personal loan only in two situation only -a) personal development and 2) medical emergency. You are bang on that.

    As you discussed, personal loan for consumption is really bad idea.

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