Everybody has dealt with a financial emergency at some point in life. Taking out a personal loan may be beneficial in certain situations. You may learn more about how personal loans can reduce your expenses by reading the following paragraphs.
In India, a lot of people ask for personal loans in order to obtain fast cash for unforeseen expenses. These are like paying for medical bills, home repairs, or consumer goods. In addition to providing you with the funds you require at a low interest rate, a personal loan can help you raise your credit score.
Personal Loans: What Are These?
Most people take out a personal loan to help them pay off a large amount right away. You can quickly satisfy your immediate cash needs with the aid of this loan. A personal loan is considered unsecured because the borrower is not required to provide collateral or guarantee the bank’s loan. Personal loans can be used for any reason. You can use a personal loan for a variety of purposes. These are not restricted specifically to the purchase of real estate or the operation of businesses.
Let’s look into the different means by which a personal loan can enable you to make long-term financial savings:
Consolidate Your Credit Card Debt
Requesting a low-interest personal loan may serve as a good way to pay off your bills. Thus, you will be able to save money if you are having trouble paying off your credit card debt. If the minimum payment every month is too costly due to the high interest rate, you can opt for a personal loan.
Credit cards often have a high annual interest rate of roughly 20%. The annual interest rate for personal loans in India ranges from 8% to 12%. Therefore, you may clear off the credit cards and save a large sum of money on the overall payout by taking out a personal loan.
To Cover Big Expenses
Everybody has to come up with sufficient funds for a large, one-time investment at some point in their lives. Asking for a personal loan gives you the option to pay back the loan over time in smaller installments as well as in immediate cash. Personal loans have significantly lower interest rates than credit cards. For this reason, these are far more affordable to use for large purchases than credit cards.
Tax Advantages
As per Section 24 of the Income Tax Act, you can claim income tax deductions of up to Rs 2,00,000. If you take out a personal loan for home renovations or as a down payment, you can claim this. Typically, homebuyers use Section 24 to get the interest rate on their housing loan lowered. Anyway, such funds can also be utilized by those who require funding for housing-related building projects but do not wish to take out a home loan.
Boost Your Credit Rating
When you use your credit card to its full limit and have a lot of debt, your credit utilization score goes up, making lenders view you as a high-risk customer. This is where personal loans come in handy because they give you a set amount of time to pay back the loan in full. Furthermore, making complete loan repayments lowers your credit use and raises your credit score.
Steer Clear of Those Annoying Hidden Costs
Credit card users frequently complain that their credit card companies are charging them extra. A lot of the time, these extra fees are hidden fees that people are not aware of. In this case, taking out a personal loan rather than a credit card is a preferable option to pay for a large purchase. You can ensure that there aren’t any hidden fees if you thoroughly review the terms of the loan agreement.
How Can You Pick One of the Finest Personal Loans?
It is quite simple to take out a personal loan these days. However, there are a lot of banks and other organizations that offer these loans, making it difficult to select one of them.
Personal Loan Highlights 2024
| Loan Provider | R.O.I | Processing Fees | Loan Amount | Cibil Score |
| Paysense Personal Loan | 18% – 22% (Reducing Per Annum) | 2% – 5% | 50.00 k – 10.00 Lacs | 700 |
| Werize Personal Loan | 15% – 22% (Flat Per Annum) | 3% – 5% | 30.00 k – 5.00 Lacs | 650 |
| Money View Personal Loan | 17% – 36% (Reducing Per Annum) | 1% – 5% | 5.00 k – 5.00 Lacs | 650 |
| IDFC Bank Personal Loan | 10.49% – 22% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 40.00 Lacs | 700 |
| Incred Personal Loan | 16% – 33% (Reducing Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 650 |
| Aditya Birla Personal Loan | 12% – 28% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 50.00 Lacs | 650 |
| Finnable Personal Loan | 16.95% – 30% (Reducing Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 700 |
| Hero Fincorp Personal Loan | 9.5% – 16% (Flat Per Annum) | 1% – 5% | 50.00 k – 10.00 Lacs | 700 |
| Muthoot Finance Personal Loan | 14% – 22% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 7.50 Lacs | 685 |
| Upward Fintech Personal Loan | 18% – 32% (Reducing Per Annum) | 2% – 5% | 25.00 k – 5.00 Lacs | 650 |
| Cashe Personal Loan | 1.5% – 3% (Fixed Monthly) | 1.5% – 2% | 10.00 k – 4.00 Lacs | 550 |
| Finzy Personal Loan | 10.99% – 18.99% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 10.00 Lacs | N/A |
| Fibe Personal Loan | 15% – 30% (Reducing Per Annum) | 1% – 2% | 8.00 k – 2.00 Lacs | 550 |
| Faircent Personal Loan | 25% – 30% (Reducing Per Annum) | 7% – 9% | 50.00 k – 10.00 Lacs | 700 |
| Stashfin Personal Loan | 2.45% – 4% (Fixed Monthly) | 2% – 2% | 5.00 k – 5.00 Lacs | 725 |
| Tata Capital Personal Loan | 10.5% – 14.25% (Reducing Per Annum) | 0.75% – 2% | 75.00 k – 25.00 Lacs | 720 |
| Standard Chartered Bank Loan | 11.49% – 20% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 1.00 cr | 740 |
| Bajaj Finserve Personal Loan | 13.5% – 15% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 35.00 Lacs | N/A |
| Axis Bank Personal Loan | 11.15% – 16.25% (Reducing Per Annum) | 1% – 4% | 1.00 Lacs – 40.00 Lacs | 690 |
| ICICI Bank Personal Loan | 10.5% – 15% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 1.00 cr | 700 |
| Fullerton Personal Loan | 14% – 32% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 25.00 Lacs | 705 |
| HDFC Bank Personal Loan | 10.25% – 16% (Reducing Per Annum) | 0.5% – 1.5% | 1.00 Lacs – 1.00 cr | 700 |
| Shubh Life Personal Loan | 28% – 44% (Reducing Per Annum) | 1% – 3% | 5.00 k – 2.00 Lacs | 650 |
| Loan Tap Personal Loan | 11% – 24% (Reducing Per Annum) | 1% – 2% | 50.00 k – 7.00 Lacs | N/A |
| KreditBee Personal Loan | 1.5% – 3% (Fixed Monthly) | 5% – 6% | 1.00 k – 3.00 Lacs | 550 |
| FlexSalary Personal Loan | 1.5% – 3% (Fixed Monthly) | 300% – 750% | 4.00 k – 2.00 Lacs | 550 |
| Mpokket Instant Loan | 2% – 4% (Fixed Monthly) | 50% – 200% | 500 – 30.00 k | 550 |
| MoneyWide Personal Loan | 17% – 24% (Reducing Per Annum) | 1% – 3% | 10.00 k – 3.00 Lacs | 650 |
| Insta Money Personal Loan | 13% – 36% (Reducing Per Annum) | 1% – 4% | 5.00 k – 25.00 k | 650 |
| Kotak Bank Personal Loan | 10.75% – 22% (Reducing Per Annum) | 0.75% – 2.5% | 1.00 Lacs – 50.00 Lacs | N/A |
| Cholamandalam Personal Loan | 14% – 22% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 35.00 Lacs | 675 |
| SBM Personal Loan | 14% – 20% (Reducing Per Annum) | 1% – 4% | 50.00 k – 25.00 Lacs | 700 |
| Axis Finance Personal Loan | 14% – 16% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 50.00 Lacs | 650 |
| Shri Ram Finance Personal Loan | 13% – 16% (Reducing Per Annum) | 1% – 3% | 1.00 Lacs – 25.00 Lacs | 680 |
| One Tap Loan Personal Loan | 24% – 36% (Reducing Per Annum) | 2% – 5% | 50.00 k – 5.00 Lacs | 650 |
| Credset Personal Loan | 18% – 30% (Reducing Per Annum) | 3% – 5% | 50.00 k – 5.00 Lacs | N/A |
The Following are Some Guidelines to Help You Select the Best Personal Loan in India:
Consider the Interest Rate: When asking for a personal loan, pay attention to the interest rate. Select an affordable interest rate. Since interest rates vary between banks, it is best to conduct preliminary research.
Be Aware of Additional Fees: Don’t just choose a personal loan with the lowest possible rate; instead, carefully review the loan details to make sure there are no unintentional fees or other charges (such as penalty fees and bounce charges).
Personal Loan: The Money-Saving Tricks
Most of us have gone through times when we urgently needed money. The fastest way to receive money is with a personal loan. Personal loans are a popular way for people to pay for what they need. The interest rates on a personal loan are not too high. Moreover, it raises your credit score. A list of ways that personal loans may help you save money is provided below.
It Enables You to Pay for Expensive Charges
Everybody has encountered circumstances where money is needed. Applying for a personal loan is quick and simple. It is also an option for you to make smaller repayments. This is less expensive than making use of credit cards.
Credit cards typically have extremely high interest rates. Thus, opting for a personal loan enables you to make long-term financial savings.
Avoid Undisclosed Charges
Owners of credit cards frequently complain that they get charged extra fees. Most people are unaware of these fees. As a result, they pay more than is necessary. This is a good situation for a personal loan. A personal loan will be more advantageous if your expenses are hefty. Carefully review the documents to understand all of the additional fees.
Raises Your Credit Rating
Let’s say you have a sizable credit card debt. You will be considered a high-risk borrower by your lender. This is when a personal loan comes in handy.
You can raise your credit score once you have paid back the entire amount. It is also imperative that you guarantee your monthly payments. You will eventually benefit from this.
Adaptable Payback Terms
Repayment choices that are flexible are another way to save money. You can select a repayment plan for a personal loan depending on how much you make. You can compare different financing choices as well. You’ll be able to save huge amounts of money doing this.
Tax Advantages
There are no tax advantages associated with personal loans. However, you are eligible for tax breaks if you spend it on house renovations. Under Section 24B, you are eligible to claim a tax deduction of Rs. 2 lakh in this scenario.
Bottom Line
A personal loan offers immediate cash with the least amount of paperwork. When it comes to selecting the monthly EMIs and the period, you have multiple possibilities. They are useful for paying for a variety of costs. Sadly, a lot of individuals end up selecting the wrong loans.
They eventually find themselves paying more than they projected and, as a result, losing money. However, you now understand how to use personal loans safely. With these loans, you may now save money as well.