The reasons for preferring a personal loan are already discussed at length, however, they can be suited better in a specific situation more. It is opted the most to close or combine the existing loans. So there are some points to be kept in mind for making an intelligent choice.
To land at a good decision, it creeps a lot of confusion in the heads. You tend to think over when it’s about a personal loan. And since personal loans have a higher rate of interest, it’s better to take a prudent call. The rates are higher compared to Home Loan, Car Loan, etc. It’s not always the best idea to use a personal loan and merge all loans. Hence, we start with our savings and investments later. This is the initial step before considering loan options. You can conveniently use short term loans to create a well-thought portfolio of avenues. Let’s have a closer look at the different scenarios.
Building Huge Credit Card Debt
Credit card debt charges a whopping rate of interest between 15%-35%. So, if you have a credit card balance of Rs.1,00,000, then your minimum payment would be at least Rs.1000. You will need nearly 15-20 years to pay off the said credit card balance. That makes a huge amount to pay back at once. And at the end of it, you will realize that it doubles/ triples up your credit card amount. Here, you are advised to take a short term loan at affordable rates of interest to realize your goals better. Have the patience to hold up! Just before you try the personal loan.
Read More: Which is the best app for short term loans in India?
Balance Transfer –
A few good banks offer 0% interest on credit card balance. SBI offers 0% interest for balance transfer in 2 months. You can find many banks offering the same facility. In fact, there are banks that offer even a 1% interest rate for transfer. However, if you choose this option, then ensure to pay off within a year. The normal rates of interest will be charged once the first year ends. You’re safe if you are good to pay off the borrowing during a low-interest rate period. Otherwise, you will go deeper into the trap!
Home Loan Top Up –
If there’s an existing Home Loan for really long, then you can easily consider a top-up loan. With the passage of time, the value of property keeps rising and this can get you money on the face value. A mortgage loan gives you an interest rate comparable to the home loan rates. This will be really helpful to clear off the credit card balance at a good rate.
Loan Against Security–
Wherever you pledge any of your assets, the loan against security counts well. The loan against security will be extremely helpful get you a short term plan. The good thing is that you will automatically pay back on time to keep your assets safe. So, when no other option works, you can try for a short term loan. With the interest rate, the prepayment and foreclosure charge much to be affordable.
Bundled up Loan Accounts
If you have a heavy fixed deposit through different schemes and lots of loans. A short term loan can fill up the vacuum to repay the loans on time. A secured loan is always better to avoid the non-repayment scare however a personal loan can be good too.
