3 Smart Ways to Use Low Interest Rate Loans

If there's one thing that applicants wish for while availing of a personal loan, it's that they get the most affordable, low-interest rate loan possible. Since personal loans are unsecured, there's no collateral/security for your lender to fall back on in case of a default. This understandably makes personal loans a riskier proposition for your lender as compared to you. This is why personal loans carry a relatively high interest rate compared to secured loans. However, these loans are still prevalent because they're much more affordable than credit cards. You can do many things to increase your eligibility for a low-interest loan, like maintaining a healthy credit score, showing good repayment capacity, or leveraging professional credentials (like a reputed employer). This article lists three smart ways to use a low interest rate loan if you ever qualify for one. Read on:

1.Consolidating Existing Debt

This is one of the best reasons to take out a low-interest personal loan. What better way to use a low interest rate loan than to save on interest payments? Suppose you have two high-interest loans that you've been struggling to pay off for more than a year. In that case, your best bet would be to convert both those payments into a single low-interest personal loan. This way, you'll save considerably on interest payments, and you'll enjoy the convenience of tracking and paying EMIs on only one loan. If you or a friend has two high-interest credit cards that you or they are struggling with, this might be an idea worth considering.

2.Paying Sudden Medical Bills

All emergencies, medical or otherwise, have a habit of hitting you unexpectedly, without any warning. This is why we're hardly prepared for one, no matter when they hit us. Even if you have a healthy habit of saving a portion of your salary every month, your savings might not cover even half of the total medical bills. In such a scenario, availing of a low interest rate loan is your best bet. Not only is it affordable (you'll spend relatively lesser on interest payments), it will also give you the amount you need. Repayment is also flexible and based on your lender. You can set your repayment tenure based on your repayment capacity. You also have the option of comparing different lenders to select one that's the most affordable for you.

3.Planning a Wedding

It comes as no surprise that people use a low interest rate loan to finance their wedding. Considering that the average cost of weddings in India ranges anywhere between ₹20 Lakhs to a whopping ₹5 Crores, you need all the money you can get to make your wedding a truly memorable affair. There are several costs involved in a wedding. The most significant ones are the venue, food, décor, clothing for the special day, and the various ceremonies that make up the celebration. So, it's recommended that you rake up your credit score as much as possible so that you qualify for the most affordable low-interest loan. A credit score of 750 and above is generally considered good by most personal loan lenders across the country. 

 Wrap Up

The points mentioned above are three of the most popular ways to use a low-interest loan. Taking out a loan to cover these expenses is still not recommended, no matter how low-cost your personal loan is. By taking a loan, you're still putting yourself in debt. So, ensure that you explore all your options before choosing to get a loan. When you do, ensure that you don't miss even a single EMI payment at any cost.

 

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