3 Ways Personal Loans Help You Save Money

Personal loans are a type of unsecured loan offered to working professionals to quickly and conveniently meet their financial needs. As a form of credit, personal loans are very convenient, mainly because they are collateral-free. If you are looking to avail of a personal loan, you needn't stress about giving up your assets as collateral. This is one reason why you'll find that the interest rate on personal loans is a tad bit higher than your average car loan or home loan.

There are several providers you can approach for a personal loan, including FinTech companies and NBFCs. Depending on your loan provider, you can find different personal loan products specific to a particular need. For example, you have personal loans for a wedding, personal loans for a low salary, and personal loan for travel as well. The application process is also straightforward and usually takes place online. Your eligibility depends on factors like your credit score, credit history, repayment ability, etc. In India, a strong credit score is a standard against which your loan application is approved. Here are three ways a personal loan helps you save money:

 Helps You Improve Your Credit Score

Even if it a personal loan for a low salary, if you avail of a personal loan and pay all your EMIs on time, it will strengthen your credit score. Taking out a personal loan will also show that you're using different credit types instead of only credit cards. Maintaining a healthy credit score can help you in two ways. Firstly, you increase your chances of being approved for a bigger loan in the future. This can aid you in meeting significant financial needs as and when they arise. In terms of saving money, you may be offered a lower interest rate on future loans, thanks to your healthy credit score. Either that or your lender may offer you a waiver of fees or charges.

 Lower Interest Rates

Another important way through which personal loans help you save money is through their affordable interest rates. If you’re used to making credit card payments every month, you’ll already know how costly they are as a form of credit. The average APR (annual percentage rate) on credit cards issued by India’s leading banks average at a whopping 41%. In comparison, the average interest rate that a personal loan offer falls between 10.50-11% per annum. So, if you want to save money but still have significant purchases to make, opting for a personal loan is a better idea.

Debt Consolidation

Imagine this: you're a working professional struggling to pay off hefty credit card bills every month while also servicing your education loan EMIs from the past two years. Individually, both of these debts are costly. But you could also save money by consolidating both of them into a single monthly payment with the help of a personal loan. This way, you only have to pay a fixed amount every month at a reduced interest rate.

Wrap Up

A personal loan is a form of credit that offers many benefits and the possibility of saving money. Suppose you're worried about your eligibility for a personal loan because you have a low salary. In that case, there are Low Salary Employee Loans, as well. Just make sure to borrow only if there's an urgent and real need, not because you want to splurge on non-essential items.


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