11 MARCH, 2020

Find yourself cringing for finances every time you think of making an expensive essential purchase? Well, you don’t need to. Today, most leading banks and financial institutes offer personal loans that can be used for a slew of purposes. From purchasing household furniture, to using it to go on your dream holiday, getting a personal loan can make for a smart move. When used in the right situation, it brings several notable benefits.

Here are some reasons why you should let personal loans aid with the big purchases:

  • Use it for multiple purposes – Unlike a specific loan type, personal loans can be used to cover any personal expense. Unexpected expenses can often leave you in a big fix. Whether you have to replace a dysfunctional T.V. set, need additional money to cover your total car-purchase cost or have to consolidate a debt, this form of loan can help in multiple ways. However, you should ensure that you use a personal loan for big purchases that you need and not those that you simply want.
  • Improve your credit score – Getting a personal loan also brings you the benefit of an improved credit score. Making your payments on time or being able to pay the full amount can help build an incredible credit history. Moreover, this kind of loan can diversify the account-types that you hold. The mix of debt accounts, with a regular payment history can work wonders in boosting your credit score.
  • Longer term for repayment –Personal loans let you choose from long repayment terms. Typically, the term ranges from one to five years. There are some banks that also offer repayment terms as long as seven years. If you have a financial crunch and cannot accommodate large repayments right away, a personal loan is a good solution for your big purchases.
  • High borrowing limits – As compared with a viable option such as a credit card, a personal loan may let you borrow a much larger amount. In some cases, you may also find that the personal loan interest rates are lower in comparison. However, do note that a good credit score can get you a bigger personal loan amount. The interest rate on your personal loan is also bound to be lower with a positive credit score.

    Getting a personal loan is a fairly simple process and will not take more than a few fulfilments with the lender. Make sure that you understand the reason why you need the loan, the amount you require and also map out the best way to handle the monthly EMIs along with other expenses.

Read more: Tips to manage your monthly personal loan EMIs effectively here.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.