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Critical Situations When Personal Loans can be helpful

Clix January 4, 2021


Critical Situations When Personal Loans can be helpful

A personal loan is nothing but monetary credit that you can use for anything as you see fit. It may be a big-ticket purchase, emergency expenses, debt consolidation, or more. You pay them back in equal monthly instalments typically over 1 to 4 years. However, it may take longer, depending on the actual amount, how diligently you make your payments and your individual circumstances.


MUST READ: Never Go for a Personal Loan in these 4 Scenarios


How do Personal Loans work?

Once you get approval for a personal loan, you get a lump sum amount of funds. Depending on the bank or your moneylender, you may get your money within a few hours, a few days, or it may take weeks at times. You have to pay it back in equal monthly instalments for the duration of the repayment term.

A personal loan can be secured or unsecured. To apply for a secured loan, you have to put up a property as collateral. In case you fail to repay the loan, the moneylender would seize your collateral and sell it out to get their money. On the other hand, an unsecured loan doesn’t require any collateral, but you need to have a high credit score to get this type of loan. Check your credit score here and see if you are eligible to apply for an unsecured personal loan. In case you fail to repay your unsecured loan, the moneylender may file a lawsuit against you.


Reason to go for a Personal Loan

Now that you know how personal loans work, you must be contemplating what situations are the best to go for a personal loan. Here are a few critical situations when a personal loan can turn out to be your best bet.

Debt Consolidation: Consolidating all your smaller loans and credit cards into a single bigger loan is referred to as the process of debt consolidation. When you consolidate all your outstanding balances into one single monthly payment, it becomes easier to manage and pay them off without getting overwhelmed.

One of the biggest advantages you get by consolidating all your credit cards and loans is the reduced interest rate. Ultimately, you end up paying a lower interest amount and you also get rid of all of your loans much earlier. When all your loans are consolidated, you have a clear end date by which you pay them off in definite terms.

Home Renovation: Whether you plan to install solar panels, putt on new roofing, remodel the kitchen, or add a swimming pool, a personal loan can be a great option to pay for your home renovation. A personal loan is an even better option for those who don’t have home equity or who don’t want to take a home equity loan. Since you don’t need to put your house as collateral, it turns out to be a less risky option than a home equity loan. So, if you are looking forward to a home improvement project, a personal loan can be a good source of finance.

Emergencies: Sudden medical emergency in the family can call for a significant financial expense. Medical bills are expensive and the hospital expenses can quickly add up to break your bank.

Common medical procedures for which you may apply for a personal loan include cosmetic surgery, dental work, and fertility treatment, among many others. Ancillary expenses such as medicines, after-care, medical travel, etc. can also be financed with a personal loan.

Medical emergencies like accidents and the diagnosis of diseases like cancer can leave a family devastated, both mentally and financially. A personal loan can be disbursed quickly because it can be a great way to cover any unexpected or emergency expense.

Purchase of an Appliance: Household requirements sometimes strike unexpectedly. If your washing machine suddenly burnt out beyond repair, than a personal loan can provide great relief. If you have plans for a computer or an entertainment centre, it could cost more than what you already have in your savings account.

A personal loan allows you to buy a major household electronic or appliance immediately so that you don’t need to wait for months before you can save enough to buy it. Just pay upfront, and you can have your desired appliance in your home the very next day.

Vehicle Purchase: If you are considering purchasing a vehicle like a car, truck, snowmobile, or recreational vehicle, then instead of depleting your emergency funds and savings, consider applying for a personal loan and have your dream vehicle ready. Personal loans can be used to finance second hand vehicles too.

Wedding: Weddings are costly affairs that become a prestige issue for many. There are many expenses involved. A personal loan can be a great way to organize your wedding exactly as you always wanted to.

To meet the expenses for the big day, consider getting a personal loan that the couple can pay back together later. So, if you are looking to finance your wedding expenses, a personal loan can pay for them upfront and save you from any kind of compromise.

Dream Vacation: Vacations are luxuries that you must plan within your budget, but what about a luxury cruise or honeymoon? Whether you are celebrating your anniversary or you just graduated, a personal loan can help finance a vacation you always dreamt of. If you are looking forward to a larger, lavish vacation, then take a personal loan to reach your dream destination.

Overall, you can use a personal loan for almost any financial need you may have in your life. The options extend much beyond what has been mentioned here. However, no matter for what purpose you are taking a loan, eventually it needs to be paid back. So, consider your financial condition and capacity to repay the loan before applying for it. Use the personal loan EMI calculator here to calculate your monthly payments and see if you are comfortable paying this amount in the future.

If you have made up your mind to go for a personal loan for any of the above reasons, then apply for it online here with Clix Capital.

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