Personal loans come with their advantages and disadvantages. The biggest advantage being that the lender or bank does not have any say in how you spend the money lent to you. Always remember freedom comes with responsibility. You need to spend the money responsibly to be able to pay the EMIs back on time.
Personal loans have one of the most rigid EMI policies of all loans. Failure on payment can result in -
Penal interest rate(2% for that month).
Extra fees by the bank.
Negative impact on credit score.
If you are availing the loan in an emergency you don’t have a ton of time to think over it then avail a little more money than you need use some amount for emergency and also use the rest to invest in right places which will help you in paying the EMIs of the loan tenure.
If you do have time to think over it and get the best deal possible then do your research on different personal loans then find out about the different bank and their schemes. Hdfc personal loan have schemes for different people and those schemes are designed to fit your needs and they will give a better deal on interest rates and payback tenure. They also provide loan amounts that will be suitable for that customer demographic. Banks tend to have loans for demographics such as farmers, doctors, public sector, private sector, IT sector, etc. Farmer loans are the best deal of all they have very low-interest rates and quite comfortable tenures. Doctors have an added advantage of getting a loan of more amount, based on their credit scores doctors can avail loans of very large amounts.
If you do want to invest the money borrowed from a personal loan then the share market is a great way to invest. Although research and study are required for investments in the share market. You need to study the share market for different companies and how their shares performed in the last few years at least.
Mutual funds are less risky than the share market where they are designed to share market portfolios by the experts. Although mutual funds can be risky and you can lose money on them as well. Mutual funds are also less profitable than the share market and this matters more when you are investing by taking a loan because you need to make more profits than the interest rate of your loan. Mutual funds are very less likely to make you as much money to pay back your loan because interest rates are very high even the lowest are as high as 9%.
If you have availed a large amount of loan and then investing in the share market then even a small splurge of prices on your shares will give you a better return over investment.
For investments in the stock market, you are buying a very small piece of a company’s assets. This can have good hefty returns although if the company faces loss then you can lose a lot of money so make sure you are investing in a company that is more likely to make profits at least some years down the line. If you can see the company growing then you can manually invest more in those assets by removing your money from assets that are not making money for you. Business loan interest rates are very high and hence you can avail of a personal loan to use for your own business. This is the best way to invest the money as you don’t have to pay business loan interest rates but you are more likely to make hefty returns because you are in charge of investing and making more money. Also being the driver to your business finances can make you pay more money towards the loan on time build your credit score pay the first loan back in time and then take a new loan to expand your business more and more.
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