How can I use my personal loan amount to buy various things this Diwali?
Diwali is a festival of lights, colour, joy, and happiness that knows no bounds. There is fun and frolic everywhere as this day is awaited every year. As soon as it nears, so will the list of expenses, including delicious cuisines, renovation, decoration, guests, and expensive gifts. Also, if you have a business, you might want to invest in buying raw materials, equipment, hiring employees, etc. To cover all those expenses without any financial assistance, you might face difficulty, especially if the cash flow is not optimum. And in such a scenario, a personal loan comes into play to help you out.
You can apply for a personal loan to cover multiple expenses this Diwali and pay it off at a lower interest rate. You can utilise the money even to invest in your business to grow it and take it to another level. A personal loan in India comes with easy EMI options for a reasonable amount of time so that you can repay it conveniently.
But is it worth it to apply for a personal loan this Diwali? Let’s find that out through this article. This article is solely dedicated to personal loans, the pros and cons of having a personal loan this Diwali, and how you should use it to gain maximum leverage.
Significance of taking a personal loan.
A personal loan helps you meet your personal requirements, which can be anything like buying a house, making a down payment, financing a wedding, or even planning a trip with your family. It is an unsecured form of loan, which implies that you don’t have to pledge your assets or shares to get a loan. The lender gives you the loan amount and charges you a rate of interest. You have to pay this amount in smaller instalments within a set period.
The best reason to fetch a personal loan is that you don’t have to state the reason to your lender about the loan. So, on a festival like Diwali, you can make the most out of this lump sum and buy various things.
How should you use this loan amount?
There are two broad reasons why you should go for a personal loan. They are:
- For business purposes.
- For personal reasons.
- For Business purposes:
Taking a personal loan is a wise move if you want to take a loan to foster your business and invest in it. In case you need a constant flow of cash to supplement your inventory, or you want to advertise your products, a personal loan will help you out.
- For personal reasons:
If you just want to take out a loan to buy expensive gifts, renovate your house, and celebrate Diwali, then you shouldn’t go for a hefty amount. Because, no matter how less the interest rates are, it is still a debt. You would dislike increasing your financial burden just for the sake of short-term pleasures. In case, you are out of funds and you desperately need money, apply for a low loan amount and choose the best interest rate.
How to use a personal loan to buy various things this Diwali?
There are some things that you should know before you seek to go for a personal loan this Diwali.
- Keeping an eye on your credit score.
Before you go for a personal loan, keep an eye on your credit score. If you have a good credit score, you can use that as a plus point to get a better interest rate with flexible options. If your credit score is more than 750, you can use that amount to get a better deal from different banks and NBFCs.
- Use it consciously:
After getting the loan sanctioned, try not to burn it out in one go. Save some money to use for the later period. In addition, if you blow all your money, you won’t be able to manage it during any sort of crisis. A simple financial shock might cause havoc. So, it is better to be conscious about your money and spend it wisely.
- Read all the conditions:
Before you stumble upon getting a personal loan, make sure that you read all the terms and conditions associated with it. This includes knowing about the flexibility, the tenure, the interest rates, the prepayment and foreclosure charges, etc. You should ensure that you are well aware of everything regarding the credit system.
- Look for alternatives:
It is always not wise to go for the conventional means to get a personal loan. You might have good ties with your bank, but you should also make sure that you look for other options available to you. There are plenty of online options that you can look for. For example, if your bank charges you an interest rate of 15% per annum, an online platform might give you a loan of 12% per annum.
- Preferring assets over liabilities:
Buying an asset is going to give you returns in the future. Whereas liabilities won’t give you any rewards, but rather will add more financial stress. For instance, buying a car or a mobile phone if you already have one, is a liability. On the contrary, buying shares from the stock market or gold investment is an act towards buying assets.
Summing it up
While a personal loan can cover all your requirements, it is important that you must be conscious about your spending. You must try to improve your credit score and go through the terms and conditions of the loan thoroughly. If you want to get a personal loan only to spend it on Diwali, make sure that the amount is not hefty, but rather is payable. If you want to get a loan for investing in your business, you can use that to gain leverage.
In case you liked this article and want to read more on personal loans, you should prefer visiting Piramal Finance.