Personal loans are an easy way to avail funding, but only if you’re using the funds for the right reasons. The best thing about a personal loan is that it does not have any usage restrictions. Thus, you can take out a personal loan to finance your child’s higher education, marriage, or pay off medical bills, or cover business expenses, etc. Many banks and NBFCs offer attractive interest rates on personal loans, comparatively lower than what credit cards charge. If you’re having a tough time making ends meet due to the pandemic, taking out a personal loan might be a reasonable thing to do. However, it is also prudent to be aware of when to avoid getting a personal loan. Let’s have a look at the three, not-so-good reasons to take out an instant personal loan.
- For A Big Vacation
Earlier, due to the lockdown and travel restrictions, people were stuck at home with limited access to the outer world. Now that the restrictions have been lifted, you might be tempted to travel and indulge in a big-ticket trip. And if money is tight, you might consider taking out a loan to finance your travel expenses. Let us stop you right there. It might not be a smart decision to get instant personal loan funds for extravagant expenses. However, it also does not mean that you must cancel your travel plans. You can consider traveling on a budget and opt for a low-cost trip to manage your finances.
- For Home Renovation
If you want to get a home repair or make some major changes to your home, please avoid taking out a personal loan for that. A cost-effective way to manage these expenses is by applying for a home equity loan or a home equity line of credit (HELOC), the interest on which can be tax-deductible. You might also be offered a lower rate of interest compared to the interest rate on personal loans.
- To Lead an Extravagant Lifestyle
If you find that you are falling short of money to pay your bills and meet other financial obligations, you need to take a closer look at your spending habits. A personal loan might sound like a good idea to get instant money, but it is still a form of debt that needs to be repaid by the end of the loan tenure. To manage your finances well, you need to understand whether you really are living within your means or are just spending unnecessarily.
It is best to not use a personal loan to lead a lavish lifestyle as it might lead to a debt trap. Cutting back on avoidable expenses can allow you to pay your bills as well as save for emergencies. A personal loan is most beneficial when you are certain of how to use it and have an effective plan to make timely repayments. To qualify for a personal loan, you need to ensure you fulfill the personal loan eligibility criteria set by the lender.
Personal Loan Eligibility Criteria
Given below is the basic personal loan eligibility criteria set by lenders for salaried and self-employed applicants.
For Salaried Individuals:
- Must be between the ages of 21-60.
- Must be an Indian citizen.
- Must work at an MNC or a private or public limited company and have at least two years of work experience.
For Self-Employed Individuals:
- Must be an Indian citizen.
- Must be between 22-65 years of age.
- The applicant should have a business vintage of at least 4 years to qualify for the loan.
Personal loans are a great way to finance all kinds of monetary requirements, especially during emergencies. You can apply for Personal Loan at Finserv MARKETS and avail a loan amount of up to Rs. 25 lakh. The rate of interest on personal loans is as low as 12% per annum. It also offers a flexible loan repayment tenure that ranges from 12 to 60 months. Thus, you can choose your tenure and repay the loan amount effortlessly. Also, you get access to value-added services like a free CIBIL score check online and Financial Health Check Report (FCHR). This report will help you understand your credit standing and provide tips to improve your overall credit health.