Lately, quick loans or instant loans have been the go-to option for those looking for an immediate source of funds. One can use the money for various personal reasons, but there are also certain circumstances in which the loan should not be used. This article discusses when you can and cannot borrow a personal loan.
When should you take out a personal loan…
* To buy something expensive. There are times when you want to make an expensive purchase or book a vacation, but don’t want to swipe your card for it. This can happen at the end of the month, payday being a few days away, or when there’s a good deal on the cell phone or appliances you’ve been eyeing. There may also be times when you cannot provide the necessary funds up front, for example, for a small house renovation costing a few lakh rupees. A personal loan is useful in those times when you do not need to dip into your reserves to finance the purchase or the renovation.
* To finance a medical emergency. Medical emergencies strike without warning and must be dealt with quickly to avoid complications. But medical procedures and hospital stays are quite expensive, and you may not have the money for immediate hospitalization. An instant personal loan can help in these cases – the money is transferred to your account within hours of the application and you can use it to fund the emergency.
* To pay for your child’s education. The costs of school and college education have increased dramatically over the years, and there are key times when you need to provide a large sum of money (paying tuition, funding a study trip of a week, and you may not have the funds ready in your account.Taking a quick loan from a good loan application solves the problem at this point.
* To close an old debt. Instant loans are often used in debt consolidation, that is, to pay off old loans. It’s a process of closing old loans with a new loan, so you don’t have to struggle with multiple IMEs. This makes financial management easier and you end up with a single loan, i.e. the instant personal loan instead of several small loans.
When you should NOT take out a quick loan…
…to pay the insurance premiums. The point of taking out insurance is that you have residual funds that can pay the premiums. If you need to borrow a personal loan to pay insurance premiums, that means the policy is a drain on your income and savings. In addition, it imposes EMI loans on you.
…to pay EMIs for an active, larger loan. Likewise, if you need to borrow another loan to pay off a home loan or auto loan, it means there is a money management problem that needs immediate repair. Taking out a loan to pay off an old loan without closing it out completely only results in more EMIs and an additional drain on your income.
…to pay off someone else’s loan. It is risky to provide a quick loan to pay off another person’s loan. You end up in debt and the borrower may not repay the money on time, which increases your debt burden and lowers your credit score.
…if you have no source of income. Some people borrow instant loans when they are about to quit their job, so they can have cash on hand to get through the months between jobs. But whether you have a job or not, you still have to repay the EMIs on the loan. It’s hard to do without a source of income.
How to get instant personal loan
Download a leading lending app that offers a fully digital application-to-disbursement interface for lending. Check the interest rate offered, list of documents, eligibility criteria, maximum loan amount offered and processing fees before applying for the loan.
Once you have taken out the loan, you can repay it each month in easy and flexible EMIs from your job or business income.