11 Innovative Ways You Can Use Personal Loans

Are you currently short on funds to fulfill certain financial goals and requirements? Personal loans are your solution for this temporary fund shortfall. A personal loan is an unsecured loan granted by banks and financial institutions to an individual for any miscellaneous requirements and helps bridge the gap between the cash required and the cash in hand for the current financial requirements. Personal loans are granted considering the past track record of an individual evidenced by the credit history,  existing relational with the bank/financial institutions and future income and repayment potential. Since personal loans are granted without any tangible security by the banks, it may be a costlier than regular need-based secured loans. However, easier availability and faster sanction procedures for personal loans make it a convenient option to go for. Here are 11 innovative ways you can use personal loans for:

1. Consolidate Credit Card Debt

Accumulating a credit card debt is certainly least desirable in your journey for financial fitness. Credit cards are also a kind of personal loan which come with a pre-sanctioned credit limit and can be availed off just by the swipe of a card. However, such a convenient draw of personal loans tends to make one inclined towards using credit card debt for routine fund requirements and making higher spends than what our regular income allows. Such a tendency pushes one into a vicious circle of credit card debt, wherein one pays only the minimum amount due every month on different credit cards as the regular income cannot take care of the whole of the amount outstanding. Paying such minimum amount due generally takes care of the interest and finance charges levied by credit card issuers and the principal amount continues to stay outstanding. You can avail a personal loan to take care of all the outstanding dues across credit cards and consolidate the debt scattered across various credit cards into one personal loan. Also, going forward, regular repayment takes care of the spiralling debt mountain and helps you get out of the debt trap.

2. Paying off Credit Card Dues

Just as discussed above, credit cards offer the easier availability of credit and hence, you may be tempted to make use of credit card sometimes to pay for big-ticket expenses. Given your monthly income, such a one-off swipe may be difficult for you to be paid off in one go. However, at the same time, use of credit through credit cards is an expensive affair. You can use a personal loan instead to pay off the credit card dues and get benefited from lower rates of personal loans when compared with the interest rate on credit card. Once you pay off the credit card outstanding, you can continue to avail of the interest-free period for your subsequent transactions, which is not available when the credit card dues are outstanding beyond a certain period.

3. Setting up a New Business

Being your own boss is definitely a desire that sits deep inside the heart of everyone. Some people can listen to that call, while some people just keep dreaming of that one day. If you are one of the former, you are going down an exciting yet challenging path. However, setting up a new business calls for large one-time expenses in terms of office furniture, office equipment and also for expenses towards publicity of the new business. Having sufficient savings before moving to set up a new business is not possible for everyone, and hence, getting a personal loan for such expenses is a better way to take care of these expenses. In this way, you can have sufficient funds in your hand to manage the business being set up and not have to restrict your dreams due to non-availability of funds.

4. Taking Care of Marriage Expenses

Marriage functions are a big affair in our country as a social function. Considering that the wedding day is the most awaited day in the lives of singles, one always tries to make it the best day of their lives. You may be having certain desires for this special day but financial constraints may be keeping you away from fulfilling those desires. Personal loans can help you make the most of this day by taking care of your financial constraints so that you can live this day as you have always wanted to.

5. Financing a Vacation

As it is said, traveling around the world is the way to live. While having a world tour may not be affordable for you currently for it calls for a bigger budget, you can set your eyes on various beautiful and mesmerising locations. Going on a vacation with family and friends can relax you and give you the much-needed break. Personal loan can be a good way to borrow money temporarily to finance a vacation instead of saving for years for your dream vacation.

6. Part-funding new Home Purchase

Purchasing a house is a big-ticket investment and people generally avail a housing loan to fund the purchase. However, just like most of the need-based loans, banks and financial institutions do not grant home loan for 100% of the property value and generally fund 80% instead. You need to pay down payment from your own funds and this is where personal loans can come to your rescue. You can pay the cash-down payment or the stamp duty charges on registration of the property through personal loans. You can also get tax benefit on the interest paid on such personal loans when you put it into use for part-funding the purchase. Howzzat!

7. Repair & Renovation of House

With the rising construction and hardware costs, getting your house renovated is a costly affair. While renovating a house might be optional in most cases, it becomes a necessity sometimes when the current structure of the house building may not be healthy enough to sustain for a long time. Such forced large-ticket expenses have the tendency to hamper your financial budget. You can use personal loans to fund the repair and renovation of your house. As per the current tax laws, you can also take benefit of tax deduction on interest on such personal loans but the amount of tax benefit is restricted to the interest of Rs. 30,000 per year.

8. Medical Emergencies

It is generally advised to get a health insurance for yourself and your family so that high medical costs do not impact your monthly budgets. While facing any medical emergency, financial crunch is the last thing you would want to come across. These are the times when each moment counts and thus, in such critical times, you can make use of personal loans to counter the fund requirement for any critical surgery or other medical expenses. Don’t let the wellbeing of your loved ones be at stake, use a personal loan instead.

9. Funding Child’s Education

Giving a good education to your child is always close to your heart. While you may have liked your child to get admission into top B-Schools he always dreamt of, the ever-increasing education expenses are often difficult to cope with. Education loans can come to your rescue in such cases to fund your child’s college fees but there are a lot many ancillary activities associated with the admission process and further during the course that don’t get funded through education loan. Personal loans are a convenient source of funds to plug temporary fund requirements and hence, you can resort to a personal loan for such expenses.

10. Financing a New Gadget for Home

While you may have always wanted a gadget like a laptop to use at home, the heavy one-time purchase cost it requires may have put you away. You can also use personal loans for financing a new gadget for home. You may have come across ‘zero percent EMI’ offers for electronic appliances or furniture etc. as consumer goods companies often facilitate you to avail a personal loan for funding your purchase. Companies tend to make use of the human psychology which puts buying something to be paid over a period of time on a better footing than paying off in a lumpsum.

11. Celebrate Exceptional Life Events 

While we are always busy in our lives earning money, life is also about creating precious moments. You may be dreaming of celebrating exceptional life events like silver anniversary, birth of your child, your child graduating from college etc. in a lavish manner, but lower savings may not support your celebration budget. In such cases, you may resort to availing a personal loan to cushion your existing savings and add to your budget for celebrations of such events. Such milestones in lives are certainly few and don’t let a temporary shortage of funds impact the way you will wanu such milestones to be celebrated.

Personal loans are an easier and quicker option for funding the temporary shortfalls in cash. But you must be cautious too to not go overboard and get a personal loan for an amount you can slowly pay off with your present and future incomes. Hope you liked the innovative ways to use personal loans that will benefit you.