How does a Personal loan save your money?

It has been witnessed off late that a large number of millennial’s are changing India’s financial viewpoint. Our younger population has grown up to become that aspiring to live for larger goals in life over a struggle filled, scanty patch. They do not hesitate to put out an extra effort to get instant personal loans and meet their soaring needs. Whether we want to plan a grand wedding or sponsor a high revenue business, personal loans can always help! Why a Personal Loan? A personal loan is considered to be an ever versatile loan which is not backed by security. It is a personal loan, which can be easily availed from a Bank/NBFC to fulfil long pending needs. A personal loan can be used for any significant or trivial reason and saves your asset against unnecessary risks.  This is exactly why interest rates are high on personal loans in comparison with home loans, car loans, etc. When a bigger amount is at stake, the interest rates are much higher (without collateral). However, with the collateral backed loans, the interest rate dips. Cash borrowed from local vendors and credit cards has higher interests to cover for uncertainties. Personal loans are the best to cover all unexpected expenditure. If personal loans are actually used for rational purposes, then the below pointers will make sense. The powerful ways in which a personal loan can save your money brilliantly:
  1. Low interest rates
As we already know, interest rates are higher on instant personal loans, as compared to credit cards or car/home loans. Hence, personal loans can be brought to use in exchange for credit card as an interest saving technique.
  1. Coupling of older debts
It is easier to take up a low interest personal loan and close the hugely taxing ones. High interest dues can accumulate and pile up to a huge amount.  This makes it nearly impossible to pay back older debts. This is when a personal loan can power play and lower the interest burden atleast. By coupling your debts, you save a humungous amount on education loans and credit card bills. So, focus on repaying high interest amounts faster than the low interest ones. Duly pre-verify with your lending company for high interest rates or exit charges.
  1. Exploit tax benefits
In theory, personal loans do not have any tax benefits per se. However, when they are taken for redoing your house or paying a house installment. You could be eligible to hold tax deduction as an additional benefit upto ₹2 lakh under Section 24B. To claim this tax benefit, you need to present proper documents and papers.
  1. Planned repayment to augment savings
Before thinking about taking a personal loan, you choose the most appropriate repayment tenure, depending on your financial pocket today & tomorrow. This factor makes more sense to people who have  larger perspective towards life and are working hard towards a better future. One could either choose a step up prepayment or foreclosure plan for a low interest EMI in the future.  This will precisely save your interest component in the most favorable manner.

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