We keep saving for years by putting aside a significant part of our paychecks and ensuring that we don’t spend it; always in pursuit of things that hold an important position in our dreams and ambitions. Yet we are often faced with the reality that our goals may be too big to be fulfilled by savings, or too immediate to depend on potential returns from investments. This is where personal loans come to the rescue.
Opportunities to fulfil our goals can present themselves when we least expect them. Unfortunately, so can emergencies. In either of these cases, a personal loan offers the funds to realize these opportunities or obligations.
A personal loan is not bound to a specific use, unlike a home or a car loan. Personal loans take into account our personal goals and needs and are hence structured to be taken for just about any reason. Our personal goals come in various shapes and sizes, ranging from beautifying our homes or travelling to needing funds to deal with a medical emergency. Read on to know what a personal loan entails and what options you can enjoy when you go looking for one.
Personal Goals and Needs
Personal loans are generally unsecured loans that allow us to meet certain desires in a shorter timeline. Although the process for applying for a personal loan is quite standard, the eligibility criteria and repayment options can slightly vary depending on the purpose of the loan.
- HomeImprovement Loan
A Personal Loan can come in very handy when deciding to renovate your home. Home improvement serves as a long term investment, albeit one that often costs more than you anticipate. This happens because the home improvement activity, as it is undertaken, tends to reveal additional problems that need to be taken care of. Home Improvement Loans provide the required funds to meet the planned and unplanned work that goes into sculpting your dream home.
- Education Loan
Quality education is a cornerstone of success in today’s world. Yet it isn’t easily accessible to everyone because of the costs involved. A Personal Loan for education arms you with the resources to provide yourself or your child the opportunity to get the necessary education for a bright future. It allows you to choose schools or courses purely on their merit, without compromising due to factors such as cost.
- Travel Loan
Travelling has proven to be an efficient method to rejuvenate the mind and get out of the stresses of everyday life. Whether you plan to travel with friends or family, a Personal Loan for travel gives you the freedom to choose your destination and the means to share your journey to your liking, without worrying about the liquidity it requires.
- Wedding Loan
Weddings are important for all Indians. In India, they are not just a celebration of love but a once-in-a-lifetime event for families to host everyone they know on the most celebrated day of their children’s lives. The Great Indian Wedding is however encumbered by the cost of such a magnanimous affair. A Personal Loan for weddings allows you or your family to plan this day to perfection, and not scale down one of your most important days
- Medical Loan
Medical emergencies by their very definition do not give you a heads up. As we are observing with the current COVID-19 pandemic, money is an extremely important factor in getting the required medical attention. If you find that your savings may not prove to be enough, a Medical Loan can, in this case, literally be a life-saving boon, allowing you to get yourself or your loved ones the care they need.
Apart from the aforementioned types of personal loans, there are other personal loan offerings available today based on their key features.
Secured vs Unsecured
An advantage of Personal Loans is that they give you the option to avail of a secured or an unsecured loan. A secured loan is one where you provide a collateral to the lender, like the title to your car or property, as security for the money you borrow.
An unsecured loan, on the other hand, comes with no such collateral. If you are in a position to provide collateral, you can enjoy lower interest rates and even borrow larger sums, since the lender is more certain about recovering his money, either through repayments or by the sale of the collateral. However, even if you cannot put up collateral, you can still be eligible for a Personal Loan and fulfil that ambition or need that many have presented itself.
Fixed vs Variable Rate
With a Personal Loan, you also have the option to choose the nature of your interest rate. Your interest can be fixed or variable. A Fixed Interest rate is one where the lender and you agree on a rate that applies for the entire term of your loan. A Variable Interest Rate is dependent on the market rates and can move up or down depending on the underlying factor.
Since your EMI is directly a result of this agreed-upon rate, it is beneficial to have these options. If the current market rate is extremely low, it is better to go with a fixed rate, since the market rate could shoot up in the near future. As a corollary, if the market rate is high, a variable rate gives you the opportunity to enjoy a lower interest rate when the market rates fall.
Personal Loans are a means of bringing your goals to fruition now. They are also a lifeline in times of personal distress. The flexibility of the use you can put the borrowed money to, coupled with the options provided to design your repayment and interest terms make Personal Loans an excellent option in your financial tool belt.