Benefits of Personal Loan in Personal Finance

[Mika]

You can get a loan not only to start a business or invest in something but also for personal purposes. A personal loan means you get a loan to fund personal things and not necessarily in a business where you expect return on investment.

You can get a personal loan for...

Paying for your medical bills (an operation, for example)

Buying a TV, Fridge, Washing Machine, etc.

Home improvements (adding a room, for example)

Paying for education (to enroll in a medical school, to fund foreign education)

If you have a regular income source but you do not have enough money to do things that you want to do, for example, get an operation, or add a room in your house, you can get a personal loan. A personal loan helps in your personal finance by funding your personal expenses.

In order to be eligible for a personal loan, you need to have something that can be used as collateral, for example, gold, land, or a house. Giving collateral is not enough, you also need an income source that you can show in papers, your salary sheet, for example. Your eligibility increased if you are employed in reputed organizations like international agencies, government jobs, etc. Your employment status will increase the chance of getting a personal loan.

 

[sincerem]

Well said, personal loans are somewhat okay, provided it is from the mortgage bank, and the interest isn't much. I can't stand to pay any interest rate above 5% of what I borrowed when due, unless it is a long term loan type. I can take a loan to fund the above mentioned options of human needs. Like, schooling abroad, or medical needs, when the demand pops up. Not taking personal loan to buy electronics, I won't try it unless the interest rate is very much affordable, and again my earnings can cover it up when the repayment is due. I will only take what I can afford as a personal loan, taking much of the loan,will put me on the frame of owing debts even if none have expired. I've seen such happened, the person borrowed from different mortgages online, and use one to cover up the loan he took from another mortgage. By the time the person realized, the loan amount is very much more than she earns. Such caused her sleepless nights, because her monthly earnings can't cover up all she had borrowed. That's why we should be very much disciplined when it comes to taking funds and solving our personal needs.

 

[Abigael]

Personal loans are great for sure. They enable you to get those things that you want but don't have your money right now. Maybe you have some visitors soon and want to redecorate your house but your salary is a week ahead. So you take a personal loan to finish that project as soon as possible.

Another scenario that leads you to take a personal loan is for education purposes. Especially when you want to enroll for higher institutions but don't have enough money. Most governments will grant you such an education loan and will no pressure to pay it back until you have a salary.

The downside of taking personal loans is when you are pushed to it by your own greedy urges to buy things that you cannot actually afford. Maybe you are buying stuff in order to compete with rich friends or you are taking loans in order to buy expensive clothes and make up.

Such greedy ventures will only lead you to trouble. This is because this is an impulsive decision and so you don't have a Solid plan on how to pay back the loan. You just end up accumulating debts without a plan on where to get money to pay it back. So every personal loan application should be done out of a conscious and well planned decision.

 

[Jasmine]

I don't have a personal loan and in my opinion, you need to avoid personal loan. I have my reasons.
If you get a business loan, you will get return on your investment, and you can use your business profits to pay back your loan. There is no guarantee that your business will make profits, but the idea behind business loan is to acquire funds to invest in something that will earn you profits.
If you get a house loan and buy a house with a loan. you will save money on rents, you can use the money that you were previously paying as rent to payback your loan; you can even rent out your property and earn rental income. You can use your rental income to payback your loan.
However, if you buy a smart TV through your personal loan, how are you going to payback your loan because your Smart TV is not generating income. Instead of getting a loan to buy smart TV why not save money for few months so that you can buy smart TV.
There is something you need to understand about loan. When you are paying loan, you not only have to pay principle but also interest