HomePersonal LoanTop 9 Reasons Why People Apply for a Personal Loan in India

Top 9 Reasons Why People Apply for a Personal Loan in India

We all work hard in our job or business to make more and more money and help our family make a living and rich lifestyle. Although we try to plan things so that we never fall short of funds for all our personal and family needs, we still face situations where we need extra money.

If you need to get a loan interest-free, then your parents, family members, or sometimes friends are the ones who can help in this situation. The last thing that we want is a loan from a bank. However, it is not a bad idea to take a loan when there is no option right? Especially a personal loan, which is easy to get with minimum documentation.

A personal loan is a non-secured loan where you do not need to provide any security to the bank or NBFCs and can be taken by anyone who is salaried/self-employed and pays their taxes. Different banks have different eligibility criteria for loan amounts and interest rates.

If you are a salaried person applying for a personal loan from HDFC bank, you can get Rs 25000 to Rs 400000 with interest rates ranging from 11.29% to 21 %( December 2018). The amount and rate of interest depend on various factors including your monthly salary, credit card history, and your working tenure.

Self-employed people may have to complete some extra formalities but they can also avail the same amount of personal loan. I will not get into details of personal loans in this blog but would like to highlight 9 top situations or reasons when you can take a personal loan from a Bank on NBFC in India.

1. Personal loan for Marriage

Marriage is an important occasion for any family and everyone wants their son/daughter’s wedding to be perfect and a very special occasion. Earlier people used to save all their lives for their children’s weddings, but now many people use a personal loan for marriage purposes. With interest rates as low as 10.25% and no prepayment charges, a personal loan has become a hot product for marriage purposes.

2. Personal Loan for Travel/Honeymoon

Everyone likes traveling and has a craze to go overseas (international travel). Travel personal loan is mostly taken by young bachelors who want to experience international travel or honeymoon couples who want to experience once-in-a-lifetime international travel experience. If you are a crazy cash-crunch traveler who has always buried traveling dreams, then the personal loan for travel is just for you.

3. Personal Loan to Pay Credit Card Outstanding Bills

This happens to almost everyone who has a credit card. I can relate this to my experience when I just started working, got my first credit card, and planned a Thailand holiday with friends. I booked all the tickets (All tickets including my friend’s tickets L) hoping that he will pay me back as soon as we are back. However, friends are friends and you can expect the unexpected from them. I ended up paying 36 %( 3% per month in 2008) as the credit card interest and then took a personal loan for 15% to clear my credit card bills.

4. Personal Loan for Medical Treatment

We all say that health is wealth. With India’s polluting environment and immune to small dosage antibiotics, we get a lot of medical problems. Thankfully we have medical insurance to cover our medical expenses. However, people ignore medical insurance and end up in deep shit with a lot of medical expenses to pay in a private hospital. Since personal loans nowadays are available online with a 30-60-minute approval process, this loan is now used by many people for medical treatment.

5. Personal Loan to Buy Consumer Products

We all want to live a luxurious life and expect the best of the best products in our homes and offices. If you are in a cash crunch but still want to buy an expensive LED TV or Big Refrigerator for your home or any other consumer goods of your choice, then a personal loan for consumer goods is an option today. No one will ask you what you want to buy and why you want to buy in a personal loan so practically it can be used to buy any product of your choice. It might even be worth finding some items to pawn at a pawn shop if you want to make yourself a bit of extra cash.

6. Personal Loan to Buy a Gift for a Girlfriend

This one is crazy. We all go mad when we are in love and can do anything to make our girlfriend happy. We all know how demanding a beautiful girlfriend can be and what we guys can do for that special smile or a kiss. I have seen girls demanding iPhones, diamond rings, laptops, etc. which can make a dent in your bank account. If you are lucky (lol) with a pretty girlfriend, then a personal loan is an option for you to make her happy.

7. Personal Loan to Start a Business

Timing is everything in business. You have a great idea but don’t have enough funds to set up an office, hire people, buy products, and do marketing. A personal loan can be a lifesaver and a game-changer for you. Assuming, you have a good credit history and currently working somewhere, you can get a handsome amount at the lowest interest rates in a quick time. Moreover, you can get a tax benefit when you use a personal loan for business purposes.

Also Read: 7 Tips When Applying for A Personal Loan

8. Home Renovation or Interiors

Have you bought a new home and have been planning a renovation? A home loan will not cover all your interior expenses but it can help make some parts of the project more affordable. Whether you need to pay your Long Beach Dumpster Company, and contractors, or just pay for more materials, it’s made a lot easier by a loan you can pay back when it’s all done. You can take a personal loan to install those MWT Windows and create your dream home without any hassle.

9. Personal Loan for Education

As a parent, you would like to give the best possible education to your child by sending him/her to the best institutes in India or abroad. Sometimes, you don’t fulfill the criteria and are not eligible for an education loan. Unlike education loans, personal loans for education do not have too many formalities. Although the interest rate is high, you get the money when you need is of prime importance.

These are some situations we know when people use a personal loan. However, a personal loan can be used for any purpose whatsoever and no questions will be asked by the bank or non-banking financial institutions. If you are someone who has taken a personal loan for anything that we have missed or any crazy thing you can think of, then please feel free to share that in our comment box.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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