A personal Loan is a convenient way to borrow funds. It is meant to be used for Personal requirements or emergencies and not for investment or business purposes.
For a personal loan, funds are granted without giving any security or collateral. Since there is no garuntee requirement, it is of prime important for the Lending Bank or NBFC to ascertain the purpose, or the end use for the funds.
It is the responsibility of the borrower to use the funds in an appropriate manner as specified while taking the loan and to return the Loan amount as per the agreed terms and conditions.
It is essential to maintain a timely repayment of the at all costs. Any delay or default can lead extra charges being imposed. Furthermore, a poor repayment track or credit history will make it difficult for the borrower to get any more funds if required in the future.
Following are the valid reasons for which a Bank will Issue a personal Loan:
We are blessed with a rich heritage of family ties & traditions. Each special occasion is celebrated in a befitting manner. May it be a Wedding in the family, religious festivities, moving to a new home or welcoming a new born.
Banks are willing to issue a Personal Loan to contribute towards funds required to make the celebration a memorable one.
Young salaried individuals, who are willing to share the responsibility of parents, can also apply for a personal loan to contribute towards expenses incurred for their wedding or family function.
For medical Expenses
We always wish our family members maintain good health, have a safe & secure life. We always wish our loved ones remain healthy & safe. But it is important to have funds available in hand to face any medical emergency which can come without a prior warning.
Help is there at hand via a Personal loan. It serves as a backup plan to successfully combat expense arising from a sudden illness.
Though medical insurance plans help us to cover medical expenses, one may need extra funds to pay initial bills for medication and overhead expenses. Banks are ready to provide a personal loan to cover medical expenses.
For the previous generations holidays or vacations meant a visit to your ancestral home, going to visit Grandparents or getting together in an Uncle or Aunts house which was in another city.
Visits to hill stations were the most popular event during summer holidays. Family cars & state buses were the most popular mode of transport.
The idea of a family holiday has changed a long way since. Travel to new and exotic destinations within the country and abroad are most popular. New dimensions have been added to the idea of travel,s uch taking a cruise on a luxury liner, visiting venues offering adventure sports, or just going to places that offer fashionable shopping experiences and exploring ancient historical sites.
If you do not enough savings to afford your family the much needed break, getting extra funds via a Personal loan is a cheap and convenient way to spend time with your loved ones and giving them a dream holiday!
Finance for Further Education
A good education is the foundation for a secure future.
Parents aspire to give their children the best education, dream of getting their child admitted to premier institutes of the country, or sending them overseas.
Education is now privatised and has become a booming industry. Starting from play school to Professional degrees various options are available. Educational Institutions are now replete with a state of art facilities. Getting admission to a premier institution is a mammoth task. The costs of admissions and monthly fees have now increased tremendously. Taking a personal loan can help you to face initial costsand stabilize the monthly budget.
Though education loans are available for professional studies they come with riders and do not cover all degrees. It may become pertinent to take a loan at this juncture to give your child a good start in life.
Personal Loan for Home Renovation
A home is an extension of oneself. It is a haven which we share with our family, where we can relax completely and rejuvenate ourselves. Giving your family the comforts they need by providing all the amenities of a modern home gives one an immense satisfaction.
Home renovation can be funded by Banks via a Personal Loan. So one can go ahead to decorate and furnish your home to make it comfortable, beautiful a home of your dreams.
Personal Loan for Debt consolidation of Credit Cards
Holding a Credit Card is an essential demand of a lifestyle today.
Banks are eager to sell cards to all customers eligible as per the salary bracket required. A freshly employed candidate will look forward to his first credit card, while Banks are keen to sell additional cards to vintage card users. A credit card is undoubtedly an asset: it is plastic money which can cover your expense. Fashionable and convenient to use, also it can save the day when finance is required for medical or other emergencies.
Paying the monthly dues of your Credit Card promptly on the due date is mandatory. Delayed payment can lead to extra charges; the rate of interest charged by banks on unpaid dues is 36% per annum.
Spending on a credit card is easy but if the payment discipline is not maintained it can lead heavy charges being imposed. By putting off payment to the next cycle by paying just the minimum balance can lead to a vicious debt cycle.
At this juncture it is best to convert your Credit Card debt into a Personal Loan.
The external bank will pay your credit card bill and convert the paid amount into Personal Loan. The Personal Loan EMI can then be spread over 5 years and the rate of Interest will be half of what you have been paying!
Personal Loan for Fancy Gadgets
The electronics industry has taken the world by storm. It has become a matter of self esteem to own the latest edition of the Mobile Phone, Computer, Tablet, Television and so on. Whether it is a work requirement or a hobby the desire to own the latest Gismo is all consuming.
A personal loan is available to purchase the latest gadget for one self or to gift a loved one. Paying back the amount via an affordable EMI will not upset your monthly budget.
Common Reasons for Rejection of a Personal Loan
In the following Scenarios, banks would be likely to reject the application of a personal loan: If the End use is for any of the following reasons;
- For purchase of Land or for down payment of a property or purchase of the same.
- Finances required for starting a new business venture.
- For the purpose investing in the Share market or purchase of mutual funds.
The Personal Loan is a product to provide funds meant strictly for personal uses. Personal loan for salaried personnel does not allow usage of funds for investment or starting a new business venture. As the risk factor is high in such investments is high, this can further lead to losses and repayment of the loan amount can be delayed.
So to enjoy the facilities provided by a Personal Loan it is advisable to plan your budget and maintain a healthy repayment record.