With the rising cost of living comes money shortage. Every day, more and more people are applying for a short credit line or personal loans to fulfil their everyday purchases. A personal loan is an unsecured loan available from banks or NBFCs, which can help you meet your immediate financial needs. 

In this article, we’ll be discussing the top eight ways in which you can use a personal loan:

1. Clearing Out Credit Card Bills

Using personal loans to pay off credit card debt has become an increasingly popular tactic to manage or reduce the overall debt load. The Annual Percentage Rate (APR) of credit cards is higher than the APR of personal loans. Hence, one takes a personal loan to end the vicious cycle of repaying expensive credit card bills.

Most people prefer this method because the EMIs on a personal loan are easier to pay off without affecting their overall expenses. And you also get some flexibility to choose the loan tenure and interest rate.

2. Covering Medical Expenses

Another purpose of a personal loan is to cover medical expenses not fulfilled by medical insurance, like the payment of hospital expenses which is when you might need money. So, instead of touching your emergency funds, getting a personal loan is better to take care of the hospitalisation and post-hospitalisation costs. Unlocking the power of a personal loan hinges on understanding your personal loan eligibility, so you can access the financial freedom it offers.

3. Fixing Your Credit History

Some people use personal loans to improve their credit history to further apply for bigger loans or credit cards. Since loans and credit cards require a strong credit score to be accepted, getting a small personal loan can help you reach that goal. If you take up this loan and repay it on time without missing any EMI, you can build a good credit score showing your creditworthiness. Personal loans can offer quick access to funds, remember they accrue interest, so use them strategically for investments that align with your retirement goals, not for lifestyle upgrades. It can also help you get loans of high amounts once you have an excellent credit history.

4. Taking Care of Wedding Expenses

Wedding expenses can go over the budget, and the increasing inflation isn’t helping the case either. People like splurging on this once-in-a-lifetime event but with the cost of weddings being double as expensive as before, you could use some financial assistance. A personal loan can benefit you as you won’t need to dig your savings or feel the need to ask your friends or family to loan you some amount.

5. Planning a Trip

Travelling is no longer considered a luxury. It is, in fact, a necessity. Your busy schedule can often leave you exhausted, which is why a trip can help. But such plans are often unable to see the daylight as finance can become a constraint. While you can create a savings plan to fund the vacation expenses, you could use a personal loan to book hotels, flights, and more. This can help fund your dream vacation while not making you fall into major debt.

6. Getting Minor Home Renovations

Every homeowner desire to upgrade their home to cherish all the latest amenities. But renovations can come with a significant amount. A personal loan can help you reach your dreams of renovating the home without hassles. Moreover, personal loans offer more flexibility compared to other financing options, such as home equity loans or lines of credit, as they do not require collateral. A Loan Against Property Calculator helps estimate EMIs for secured loans using collateral, the power of a personal loan lies in its unsecured nature, offering faster approvals and flexible uses. This means that homeowners can take out a personal loan without risking their home or other assets. Additionally, personal loans typically have fixed interest rates and predictable monthly payments, making it easier for homeowners to budget their expenses and avoid any surprises.

7. Consolidating Debt

The main problem for late repayments for many individuals is not their laziness or inability but because of too many ongoing loans. Too many loans automatically come with too many EMIs to pay off. To pay off all their debts once and for all, several people take out a personal loan and consolidate all their debts into one loan with a fixed loan tenure and interest rate. This way, it’s possible to repay the existing loans without undergoing the inconveniences of too many debts.

8. Buying a Second-Hand Vehicle

If buying a vehicle has been on your mind for some time now, but money was the major concern for your purchase, you would be glad to know that you can use a personal loan to purchase a second-hand vehicle without causing wreckage in your bank account, here are some key factors when buying a used vehicle.

Bottom Line

Personal loans can provide an invaluable service to those needing fast and flexible financing for various expenses. Today, some FinTech companies give personal loans, but it depends on other major factors. Whether you’re looking to consolidate debt, pay off bills, cover medical costs, finance a wedding, or take a vacation, personal loans benefit you by giving you financial freedom and peace of mind.