What a personal loan can be used for?
Everyone has to borrow in his life at some point in time. An individual borrows for various reasons and on various occasions. For a big ticket item like house purchase one, generally, does not have any other option but to take a home loan which is generally planned well in advance and requires you to follow a little longer process and takes little long time. On the other side, there is a personal loan as a product which is generally availed for meeting unplanned expenses and involves lesser paperwork and thus has shorter processing time. Personal loans are given without the borrower having to specify any purpose and thus has widest possible purposes for which it is availed. Let us discuss the various reasons and occasion for availing the personal loans.
Meet an emergency like situation
Since in case of personal loan you get the money in hand within the shortest possible time except probably the loan against your bank fixed deposit, it comes handy when you need money in an emergency like situation. A medical emergency is the most common of emergencies like situations where you need cash immediately and substantial amount as well. For any planned surgery, you have time to arrange for the funds but in case the operation required to be carried out because of an accident, you need the money immediately. So in such emergency like situation, you can take recourse to a personal loan to meet the exigency of the situation.
As the amount to be paid as school fee and fees for classes nowadays is substantially high, especially at the time of the beginning of the academic year, it is not possible for salaried who only get fixed amount every month to defray such huge costs unless you have saved for such expenses in advance. The reality is that in a majority of the cases the savings are not sufficient enough to meet such expense, therefore, people take personal which offer you the flexibility to repay over the tenure of 12 months to 60 months. With personal loans, it becomes possible for such people to be able to pay the fee at the right time and ensure that the education of their children is not jeopardised. There are some courses for which education loans are not available or it is not available for any other reason, in such situations one can take a personal loan to fund such courses and repay it in future in convenient instalments.
It is always better to first save and then spend on your holidays rather than to borrow to enjoy the holidays. But there may arise a situation where your savings may not be sufficient enough to meet the cost of the holidays which the family wants to go and to the destinations which have not been planned in the budget. In such situations, one can take recourse to personal loans to fulfil the wish to go for the holiday at the time when wishes to go.
Paying for margin money for the house
The banks or housing finance companies generally do not give home loans beyond 80% of the cost of the property and the balance 20% has to be contributed by the home buyer. This part of the cost of the house which the buyer himself has to fund is called the margin money in the banking parlance. Moreover, the lenders are also not allowed to fund the stamp duty and registration charges. The amount of the home available is constrained by your income as well as the cost of the property being purchased. It may also happen that even if you are eligible for a higher amount of home loan based on your income but the same is curtailed due to the cost of the property. In such a situation you can avail the personal loan to fund the margin money in case you do not have enough liquidity to fund it. Moreover, a personal loan can come handy to fund the stamp duty and registration charges. Even some of the home loan borrowers plan the time of making home loan application and personal loan application in such a way that the one lender does not know about the other loan application. With such modus operandi, some of the home buyers are able to get a personal loan while availing the home loan on the basis of their income criteria which one would not have otherwise been able to get.
Repair and renovation of the house
A personal loan can also be and is in fact used for the purpose of carrying out repairs/renovation of the existing house. Since the processing time for getting money as a personal loan is shortest, it comes handy in case an urgent repair of the house is to be carried out. The personal loan also comes handy in case of repairs of the house which is not owned by you resulting in you not being able to get a home loan for repair.
Marriage and honeymoon expenses
One’s marriage is the most important an occasion in one’s life which no one wants to compromise for want to funds. This is equally applicable in the case of a marriage of your children or even your siblings in case they are financially dependent on you. How meticulously you plan an occasion, the budget is bound to overshoot and what else but personal loan to resort to filling up the gap between the budgeted expenses and the actual expenses. In some of the cases the marriage expenses are borne by the parents but the honeymoon expenses are generally borne by the married couple. With the trend of newly married couple opting for foreign destinations for a honeymoon, the cost of such trips is significantly higher than what it used to be earlier. So many of the married couple who have not saved enough for it, take a personal loan to fund the honeymoon expenses.