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How to Apply for a Personal Loan: Step-by-Step Guide | Fi Money

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Personal Loans: When to Get One & When to Avoid them

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"Personal Loans: When to Get One & When to Avoid them"

Pranav Karnad

Get your loan basics covered: Think interest rates, clearing debt, etc.

<p>
    It’s no secret that personal loans are one of the most effective financial instruments available to you. Yet, there are multiple questions surrounding such funding options.
   </p><p>
    For instance, many people are still unsure about
    <strong>
     how to get a personal loan
    </strong>
    or whether it's the right decision in the first place. This article will answer both of those questions. As a bonus, it will also examine when you should avoid leveraging such funds.
   </p><p>
    Let’s jump right in!
   </p><h2>
    When Should You Opt for a Personal Loan?
   </h2><p>
    Before explaining
    <strong>
     how to get a personal loan
    </strong>
    , it is critical to elaborate on when you should opt for one and when you must avoid them.
   </p><p>
    Now, such funding options can help you meet the more expensive milestones in your life—purchasing a car or a down payment on a new house.
   </p><p>
    A vast majority of people also leverage such financial help to consolidate their debts. So, say you have multiple payments to make each month. A single loan can square off all of them and simplify your life.
   </p><p>
    A few other circumstances that could warrant a
    <strong>
     personal loan
    </strong>
    include the following:
   </p><h3>
    1. Home Renovations
   </h3><p>
    Renovating your property can be a great way to raise its value. It will also boost your home equity. However, partial or complete remodelling can be expensive. For instance, installing a modular kitchen in India can cost beyond a lakh. You might want to consider personal loans to fund such projects.
   </p><h3>
    2. Medical Expenses
   </h3><p>
    There's no telling when you or a loved one may need to undergo major surgery or treatment. More importantly, they come with hefty bills to pay. As such, personal loans could help you here If your insurance doesn’t cover it. Even so, consider borrowing only as much as you need to meet the costs. Going beyond that will result in unnecessarily high interest rates.
   </p><h3>
    3. Consolidating Higher Interest Loans
   </h3><p>
    If you currently have a loan with a high interest rate, it is wise to consider taking a personal loan to repay it. For instance, if you have an outstanding credit card loan with an interest rate of 24-36% per month, opting for a personal loan with a lower interest rate ranging from 10-18% can significantly reduce your interest expenses.
   </p><h3>
    4. To improve your credit score
   </h3><p>
    Having a good credit score is crucial when considering a future loan application. A simple strategy to achieve this is by obtaining a small personal loan and ensuring timely repayment. By doing so, you establish a positive credit history that lenders can evaluate, increasing your chances of qualifying for larger loan amounts in the future.
   </p><h2>
    What Should You Not Use a Personal Loan for?
   </h2><p>
    Let's start with something basic: Never use these funding options for gambling. Not only is that illegal but it's also akin to digging two graves and trying to decide which makes a better bed.
   </p><p>
    That aside, here are two other specific cases that don’t fall under acceptable
    <strong>
     personal loan uses
    </strong>
    :
   </p><h3>
    1. Investing in Stock Markets
   </h3><p>
    Stock markets are volatile enough already. Risking borrowed funds in this space can result in greater losses than you had anticipated. For instance, apart from your recently accrued debt, you have to worry about paying back the sum with interest. That could severely impact your financial position.
   </p><p>
    This applies as a general rule to every other investment channel, including stocks, cryptocurrency, mutual funds and other securities. So, avoid viewing personal loans as a get-rich-quick scheme.
   </p><h3>
    2. Replacing Your Savings
   </h3><p>
    A
    <strong>
     personal loan
    </strong>
    is meant to help in emergencies. You can also use them to finance large purchases. However, it is inadvisable to bolster or otherwise replace your savings with such funding options.
   </p><p>
    And it mostly comes down to how these loans are unsecured. So, even though the interest rates are nominal, they are still higher than secured variants.
   </p><h2>
    How to Get A Personal Loan
   </h2><p>
    If you are still curious about
    <strong>
     how to get a personal loan
    </strong>
    ,
    <a href="https://fi.money/features/instant-loans">
     Fi Money
    </a>
    can help!
   </p><p>
    With instant access to pre-approved loans of up to 5,00,000 INR, we ensure that you get the financial resources you need
    <em>
     when
    </em>
    you need them. Apart from offering highly competitive interest rates, we keep the entire process 100% digital. You could even set up automated in-app payments to avoid late EMI charges.
   </p><p>
    Register on the app today!
   </p><h2>
    Frequently Asked Questions
   </h2><h3>
    1. Is there any reason you should not take a personal loan?
   </h3><p>
    It is advisable to avoid a personal loan if you lack the financial responsibility to adhere to regular payments. In addition, never use such funding options for gambling or to replace your savings.
   </p><h3>
    2. Is it better to take a loan or use your own money?
   </h3><p>
    If you have to finance a major purchase and do not wish to break into your savings, it is always better to take a personal loan. In other instances, such as investments, it would be wiser to use your own funds.
   </p>

Personal Loans: When to Get One & When to Avoid It | Fi Money

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