A personal loan is an unsecured type of loan. This means that a borrower doesn’t have to keep any collateral to borrow a personal loan. Furthermore, it can be availed for multiple purposes. In this article, we will explain a few instances when an individual should consider borrowing a personal loan.
Most types of loans can be availed by keeping an asset as collateral. For instance, when a person takes a home loan, his/her house will be kept as collateral till the loan is repaid. However, there is no collateral required to avail a personal loan. This is one of the main reasons why people prefer personal loans.
Furthermore, most of the other types of loans can be taken for a specific reason. However, a personal loan can be availed for multiple purposes. The borrower has the freedom to choose how he/she wants to spend the funds.
Nowadays, many people are choosing personal loans in order to pay for a financial emergency or to fund a big-ticket expense. With that in mind, here are a few instances when a personal loan might be a good option.
- To Pay for a Medical Emergency
Most experts recommend that every person should have health insurance. Health insurance can be of great help in case of a medical emergency. However, a person who doesn’t have a health insurance plan can get financial assistance by availing a personal loan.
The documentation process of a personal loan is easy and its disbursal process is fast. Thus, with the help of a personal loan, an individual can quickly get funds to pay the medical bills.
- To Fund a Vacation
Nowadays, everyday life has become hectic due to the increasing workload. Therefore, many individuals go on vacations to escape the hustle and bustle of daily life. However, vacations can cost a lot of money. But by availing a personal loan, a person can easily fund this expense.
- To Pay for Home Renovation
Renovating a home requires a significant amount of money. While an individual can pay for this expense by taking a home loan, he/she will have to keep the house as collateral. A better alternative is a personal loan. This is because if an individual borrows a personal loan, he/she doesn’t have to pledge the house as collateral.
- To Fund a Wedding Ceremony
Financing a wedding ceremony can be expensive. This is another situation when a personal loan can provide financial assistance. It is a much better option than paying for the expenses by credit cards. Generally, the interest rate of credit cards is higher than personal loans. Therefore, by availing a personal loan, an individual can save a lot of amount on interest.
Documents Required to Avail a Personal Loan
- Aadhaar card number for eKYC
- ID proof (Required only if eKYC is not done)
- Address proof (Required only if eKYC is not done)
- Salary slips (Last 3 months)
- Bank statements (Last 3 months of salary account)
- Rent agreement (If applicable)