Smart borrowing: know when to use a Personal Loan

2 min read Oct 25, 2023

Loans are available to meet every expense, from buying homes to vehicles. But what about smaller expenses like your next vacation, the new LED television that you wish to buy, or unexpected medical expenses?

These requirements could wipe off your monthly income, perplexing you about how to manage the necessities. In such situations, Personal Loans prove to be helpful. 

Functioning of a Personal Loan

Personal Loans are unsecured loans taken either from banks or non-banking financial companies (NBFCs). They can help you meet your immediate monetary requirements. The process of obtaining a Personal Loan is similar to other loans. A Personal Loan EMI Calculator helps you know the exact EMI you pay on the loan amount.

Knowing if Personal Loans are the right fit

Opting for a Personal Loan depends on your borrowing requirements, current financial situation and personal goals. If the repayment tenure and interest rate are favourable, Personal Loans can be helpful during times of financial distress.

Reasons to get a Personal Loan

• Home renovation: If you have to upgrade your home and do not wish to borrow funds from others, a Personal Loan is ideal as you do not need any collateral. You can even use it for minor home renovations, such as fixing electrical wiring or plumbing.
• Big purchases: If you plan to buy big appliances like a washing machine or a refrigerator, a Personal Loan helps make immediate payments. You can use Axis Bank Personal Loans to meet all your requirements.
  You can get a loan ranging from ₹50,000 to ₹40,00,000. The documentation process is quite simple. If you already have a high-interest Personal Loan, you can transfer it to Axis Bank!

• Wedding expenditures: Weddings, engagements, and various other ceremonies involved in a wedding come with many big and small expenses. These include the outfits, venue, food, etc. You might not have the funds to cover all these expenses. A wedding loan helps you have your dream wedding.
• Moving expenditure: Getting a job transfer or moving to different locations for better opportunities involves moving your household goods too. The costs involved in transfer vary as per the distance and the number of things. You can use a Personal Loan for this, rather than breaking your emergency fund.
• Clearing debts: You can use a Personal Loan to clear off debts such as your Credit Card bill, smaller loans, or high-interest debt.
• Meet emergency expenses: Sudden emergencies such as hospitalisation, unexpected house repairs, etc., might need immediate funds. You would not keep excess cash at home and meeting such emergencies could be stressful. Personal Loans are a great option to meet an unexpected crisis.
• Avoid payday loans: Payday loans come with a short repayment tenure and a high interest rate, which makes repayment a tough task. On the other hand, a Personal Loan has a longer repayment tenure and a lower interest rate.
• Buying a vehicle: When you buy a second-hand vehicle from a friend or any other person, you can use a Personal Loan instead of your savings to pay.
• Vacation costs: Vacations take a huge chunk out of your savings. Though you might save some funds for your vacation, there might be times when you need extra funds to splurge! Personal Loans give you the extra buffer you need and make your vacation stress-free.

Conclusion

Personal Loans are quite helpful in meeting emergency requirements or planning your dream wedding without the need to break into your savings. However, ensure you understand the terms, repayment tenure, interest rate, and other aspects before you take a loan. 

[Also Read: 4 must-follow rules for Personal Loans]

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision