The other day in our office discussion during the coffee break turned to loans, car loans , home loans and personal loans. Many of my colleagues had taken personal loan. Rationale being a home or auto loan won’t be of any use if you are in urgent need of money to tide over a general financial emergency. You cannot use the money sanctioned towards a home or a car for any other purpose. Further, the lengthy formalities involved in these loans make them unsuitable for those in urgent need of funds. While banks and financial institutions offer flexible loans for those in urgent need of cash without onerous formalities, most of us make the mistake of completely ignoring this option due to its high costs and risks. Read ahead for an overview of four instances when opting for a quick loan with no usage restrictions can prove very beneficial.

Managing a Medical Emergency

Unlike other problems, you cannot simply ignore a medical emergency just because you don’t have enough cash in hand. In such a scenario, applying for a personal loan can help you tide over the crisis without the embarrassment of requesting friends and relatives for assistance. Apart from ensuring your family member enjoys quality treatment, the decision to opt for such a loan will minimize the financial consequences of this expenditure.

Renovating Your Home

Opting for a personal finance product to renovate your home may seem like a very expensive proposition, especially when banks and financial institutions offer home equity loans. However, such a loan may make financial sense if you’re planning to sell the property in the near future. You can use the money to spruce up your house and get a better price from the seller. Then, you can simply repay the loan from the profit earned from the sale.

Building Your Personal Credit

Your credit rating depends primarily on your ability to manage your debt. A person without any debt is unlikely to enjoy a high credit rating, especially when applying for a long-term loan like a mortgage. In such a scenario, going in for an unsecured loan and repaying it on time can help you build your credit rating. Since you can use the money without any restrictions, you might as well splurge on the latest television or home entertainment system when trying to improve your personal credit.

Debt Repayment

Paying interest on an unsecured loan is always a better proposition than creating personal obligations by borrowing money from friends and relatives. If you have such debts, then you can go in for an unsecured loan to consolidate your finances. Further, you can refinance expensive loans with a relatively cheaper unsecured debt and take advantage of reduction in interest rates in the market.

Unlike secured loans, credit offered without any collateral security requires payment of interest at a higher rate. However, this does not mean you should completely ignore this convenient source of no-questions-asked money. Apply for personal loan after considering your immediate requirements, future income prospects, and the pros and cons of alternate options.

Repayment is done every month via EMIs. You have to pay fixed amount every month and have to submit post-dated cheques or you can mandate them to directly debit the EMI by ECS ( Electronic Clearing Services) with the Bank where you have an account. The repayment affects your credit history which affects your future capability of paying loans.  Our article Understanding CIBIL CIR report explains CIBIL CIR report in detail.  We came across Tata Capital’s Personal Loans which offers personal loan without any collateral and also multiple repayment options. For salaried  customers they offer Flexi EMI Personal Loans with multiple repayment options like Step Up, Step Down and Bullet repayment, thus giving them the freedom to repay their way.

• Step Up Flexi EMI plan :  allows you to increase your fixed monthly EMIs every year to match the increase in your annual income.  It is suitable For Customers who see a healthy growth in their annual income
• Step Down Flexi EMI plan : allows you to start repaying your personal loan with a higher EMI and lower it year after year. Meaning you can repay faster and save up on finance costs.
• Bullet Flexi EMI plan : allows you to prepay your loan in parts at periodic intervals. These periodic payments will help lower your EMI considerably. Moreover, no charges will be levied on  prepayments. It is suitable for those who expect a bonus or periodic increments on their  regular income.

Our article Personal Loans Basics covers Personal Loan in detail

Related articles:

• Understanding CIBIL CIR report
• Personal Loans Basics
• Credit Card Debt
• EMI and Amrotization Table Calculator
• FAQ on CIBIL CIR Report and Score

Personal loans are one of the most expensive forms of loan available in the market. But at times like family emergency taking Personal Loan does make hell lot of sense. Debt is debt. The only certainty of a loan is that it has to be paid back. Loans establish our credit history : good or bad. The trick is to only borrow what you need and what you can afford to pay back. Have you taken Personal Loans and if yes why?

Flexi EMI Personal Loans