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Personal loans can be a great way to get extra finance or funding, especially if you are a salaried professional. But do you get confused about how they work? And how can you decide if a personal loan is right for you? Let’s break down the uses and benefits of personal loans for salaried.
How Do Personal Loans Work for Salaried Individuals?
Personal loans for salaried individuals are typically based on income and credit history. Lenders will typically look at your salary to determine how much you can afford to repay each month. They’ll also look at your credit history to ensure you are not a high-risk borrower. That said, it doesn’t mean you can’t get a loan if you are a new credit student. There are fintech platforms and other lenders that lend to first-time or new credit borrowers.
You’ll typically receive the funds within a few days of your personal loan approval. With the application process going online, disbursals are as fast as within minutes as well now. The interest rate on your loan will depend on factors like your credit score, borrowing history, salary, and the lender you choose. Repaying your personal loan is typically done through monthly payments called EMIs.
How Do You Know if a Personal Loan is Right for You?
You should take on a debt only when you need it, and it’s beneficial. For instance, you can get a small salary-based loan instead of using a credit card to purchase an expensive item. The interest rate of personal loans is often less than that of a credit card. In the next section, you will get more clarity regarding where to use a personal loan.
7 Uses of Personal Loans for Salaried Individuals
There can be various uses for personal loans, including emergency expenses, debt consolidation, and home improvements. Here are the top 7 ways you can utilize personal loans.
1. Debt Consolidation
This is one of the best uses of personal loans. You can pay off your high-interest debts, such as credit card bills, through a personal loan. It is called debt consolidation, where you take one low-interest credit or loan to pay off all your high-interest credits.
2. Emergency Expenses
One of the significant benefits of a personal loan is that you can get it quickly. You can get the amount in your account in less than 48 hours if you apply for it digitally. That makes personal loans ideal for help during emergencies.
3. Home Improvement
Although it’s not urgent, getting a home improvement can lift your and your family’s spirit. But it often gets pushed back due to budget constraints. A personal loan is repaid in easy EMIs so you can fulfill your dream.
4. Life Events
Some major life events need finances, such as relocating your kids to another town for educational purposes or adopting a child. You can use a personal loan to cover these expenses when the need arises.
5. Big Purchase
You can use personal loans to purchase an expensive item such as a vehicle or mobile phone. You get consumer and auto loans, but they use the purchased item or vehicle as collateral. If you are worried about missing payments, take a personal loan.
6. Travel & Vacation
Travel and vacations are ideal for breaking the monotony of your routine. However, you often keep postponing them due to budget constraints. You can consider taking a personal loan for a world tour and refresh your mood.
7. Wedding Expenses
A wedding can be as expensive as you want it to be. But even if you don’t indulge in the typical extravaganzas of the celebration, the cost of a basic wedding function also can’t be referred to as nominal. A personal loan can help you fill the gaps in your budget.
Personal loans can be an excellent tool for salaried employees when used correctly. They can help you fund the comforts of life as well as emergency expenses. Also, ensure your repayment capacity.