A home or auto loan won’t be of any use if you are in urgent need of money to tide over a general financial emergency. You cannot use the money sanctioned towards a home or a car for any other purpose. Further, the lengthy formalities involved in these loans make them unsuitable for those in urgent need of funds.
While banks and financial institutions offer flexible loans for those in urgent need of cash without onerous formalities, most of us make the mistake of completely ignoring this option due to its high costs and risks. Read ahead for an overview of four instances when opting for a quick loan with no usage restrictions can prove very beneficial.
Managing a Medical Emergency
Unlike other problems, you cannot simply ignore a medical emergency just because you don’t have enough cash in hand. In such a scenario, applying for a personal loan can help you tide over the crisis without the embarrassment of requesting friends and relatives for assistance. Apart from ensuring your family member enjoys quality treatment, the decision to opt for such a loan will minimize the financial consequences of this expenditure.
Renovating Your Home
Opting for a personal finance product to renovate your home may seem like a very expensive proposition, especially when banks and financial institutions offer home equity loans. However, such a loan may make financial sense if you’re planning to sell the property in the near future. You can use the money to spruce up your house and get a better price from the seller. Then, you can simply repay the loan from the profit earned from the sale.
Building Your Personal Credit
Your credit rating depends primarily on your ability to manage your debt. A person without any debt is unlikely to enjoy a high credit rating, especially when applying for a long-term loan like a mortgage. In such a scenario, going in for an unsecured loan and repaying it on time can help you build your credit rating. Since you can use the money without any restrictions, you might as well splurge on the latest television or home entertainment system when trying to improve your personal credit.
Debt Repayment
Paying interest on an unsecured loan is always a better proposition than creating personal obligations by borrowing money from friends and relatives. If you have such debts, then you can go in for an unsecured loan to consolidate your finances. Further, you can refinance expensive loans with a relatively cheaper unsecured debt and take advantage of reduction in interest rates in the market.
Unlike secured loans, credit offered without any collateral security requires payment of interest at a higher rate. However, this does not mean you should completely ignore this convenient source of no-questions-asked money. Apply for personal loan after considering your immediate requirements, future income prospects, and the pros and cons of alternate options.
Note – One of the financial institution which offers personal loan without any collateral and also multiple repayment options is Tata Capital. Visit Tata Capital to know more about personal loans.
