Loans are provided to an individual based on their credit history. So before resuming why a personal loan is a good option? We should first understand what is a loan?. It is a complete approach, where the client borrows money from the bank and had to pay back the debt in a fixed tenure. These loans are taken to meet the personal needs of a person. Sometimes these loans are considered as ‘Unsecured loans’ because there is no collateral secured.
To get qualify for a loan eligibility criteria, you have to come under two categories that are either you have to be a self-employed individual or you can be a service person. A loan is given to a person for a fixed tenure, which varies from bank to bank. There are generally two ways to pay back the debt, either you can pay the debt through cheque or you can go for the monthly installments. However, there are various online ways where you can compute your EMI as well as you can find a decent personal loan interest rate.
Why loans can be a good option?
Here are 5 situations where opting for a loan might be a great option:
Consolidate Credit cards:-
If you are having more than one credit card that has been charged to the maximum, then you can go for opting for a loan that consolidates all the charges into a single monthly payment or EMIs. Generally, loans have lower interest rates than the yearly percentage rate of your credit card and create a risk-free environment for your newly available credit limits.
Finance a purchase:-
If you anyhow want to opt for a loan, then opting for a loan and paying the bank/NBFC in cash would be a great option than financing through a seller. Never make economic decisions in hurry, first, compare every aspect and then go for the better choice. Indian Overseas Bank Personal Loan provides relaxation on purchasing expensive gadgets.
Spend for a wedding:-
Loans play a crucial role in large scale events like marriage. If you are going to spend all your money through credit cards, then there are chances of getting a higher interest rate than the loans.
Improve Credit Score:-
Loans help in lowering the credit utilization ratio (the total credit you’re using compared to your credit limit), the lesser the total amount of credit you use, the better the credit score you achieve. Interests on cards are 5-6 times more than the loans. Try to achieve a credit score of 750 or above to easily pursue a loan.
Refinance education loan:-
Refinancing an education loan with a personal loan can help you in a lesser interest rate that allows you to pay back your loan faster. If you want to fulfill your personal needs or you want to overcome any unforeseen situation, these loans might be a great option for you.
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