There is no denying, a personal loan can be a great resort in times of financial hardships. The funds from this kind of loan can be used to serve different requirements including a medical emergency, a wedding, educational fees and more. Fortunately, getting a personal loan has become an easier process in the digital age. The loan is unsecured and you can apply for one online as well. While one may typically turn to a personal loan in times of absolute financial emergency, it can also be used in ‘Smart’ ways. It may sound unusual but a personal loan can prove to be a positive debt account.
Here are some ways in which you can use a personal loan wisely:
Save money – You may be currently in debt as a result of another loan. This loan could have a very high interest and thus, you are straining your monthly budget and losing on big money. Seeking a personal loan that comes with a comparatively lower interest rate is a great way to save money. For example- If you currently have a debt wherein you pay 15% interest rate, you can opt for a personal loan that offers you a much lower personal rate.
Consolidate debt – Handling several debt accounts is not only stressful but can also lead to incurring a great cost in the form of interest rates. A good way to consolidate your debt into one account is by getting a personal loan. You can use the funds from a personal loan to pay off all your debt and thus, have only one EMI to make each month. Additionally, you can stay organized and have a repayment schedule in place.
Boost your credit score – A personal loan can be a great help if you are looking to create a favorable credit score. If you have a good financial standing, but a do not really have a credit score to speak of because you have never taken a debt, then a personal loan could be great. Making regular personal loan EMI payments in the stipulated tenure will have a positive effect.
Before applying for a personal loan, stay informed of the different fees and charges that are associated with the same. Ensure that the EMI, processing fees, interest costs and more align well with your financial plan.