Reasons to (or not to) take a Personal Loan

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Let me guess? You need cash. A lot can go wrong in an instant and it’s not possible to be always prepared. Especially when it comes to money. With instant personal loan apps readily available at your fingertips, you will surely be tempted with the idea of a loan. Perhaps you have just started considering or maybe you’ve exhausted all other options. Either way, this article will help you determine the best decisions to take.

A personal can loan rescue you from a financial disaster or worsen a relatively stable one.

Good reasons for taking a loan:

1. Consolidate your debts: If you have debts with high interest rates, like outstanding credit card debts or if you have multiple personal loans, it can be a good financial move to take a low interest loan to pay them off. However, you should thoroughly examine the interest rates and prepayment penalties/ processing fees to determine whether you will actually be benefitting from such an arrangement.
2. For higher education: Investments in education is recommended. Higher qualification and upskilling is one of the many ways you can expand your professional portfolio and further your career. This will mean higher pay and overall improvement in quality of life.
3. Home improvement: House loans usually require you to offer up a collateral i.e. security, like your house or car. On the other hand, personal loans are usually unsecured i.e. collateral free. Remodelling your home increase your property value which can outweigh the cost of the loan in the long run.
4. Build Credit: Taking a small personal loan can increase your credit worthiness which means you’ll be able to take large amounts at better interest rates. But the loan should be small enough that you can pay it off quickly without any burden to your current financial situation. Else, you might end up with a worse credit score.

Less advisable reasons to take a loan

1. If your income and employment aren’t stable: This goes without saying but if your income is not stable due to the nature of your work or other reasons, taking a personal loan might become a burden too big to bear.
2. To fulfill 80C investment requirements: You should start saving at the start of the financial year if you wish to fulfill your 80C needs. Taking loans last minute, just to tax benefits, often leads to decisions that can be more damaging to your financial health.
3. Wedding or Travel: While personal loans can be quite popular for financing a wedding or a holiday, it is not recommended since personal satisfaction is the only profit you can expect from such an investment. Before availing, make sure you will be capable of repaying the loan.

Whatever the reasons might be, taking a loan is a commitment and it comes with its share of risk and rewards. A cautious and informed approach must be exercised to ensure that the risks are minimized and the rewards maximized. For the best personal loan app in India, download NIRA. With low interest rates and flexible payment schedule, NIRA will guarantee that your money needs are taken care of responsibly, without causing any financial headache.

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