Since lenders don’t inquire about the reason when people take out personal loans, we see these loans being used for a wide range of purposes. If you’ve been contemplating applying for a personal loan, you’d want to know what qualifies as a “good reason” for getting one.
Most people are inclined towards personal loans because of low credit history standards. Interest rates and repayment timelines are also generally feasible. People may have various ideas in mind when opting for these loans.
Let’s dive right in to discuss the top reasons people get personal loans with Nifty.
7 Common Reasons People Apply for a Personal Loan
1. Debt Repayment
Many people take out a personal loan to pay off existing loans. They replace multiple loans with a single monthly payment through debt consolidation, often at a lower interest rate. This makes it easier for them to pay on time and keep track of payments.
Those with accumulated credit card balances who want to give up using the service after running up big debts over the years often see a personal loan as an appealing option.
2. House Remodeling
People interested in giving their home a makeover without burning a hole in the wallet may also go for a personal loan. It’s also a good option for those short on cash.
If you want to renovate your property to make it more suitable for your family, it’ll be a smart use of the loan, especially if the alternative solution involves buying a new home and getting a full mortgage.
3. Purchasing Big-Ticket Items
Getting a personal loan also makes sense if you’re considering making a large purchase. This could be anything from your favorite car, dream house, or a big vacation to a grand wedding.
Depending on the big-ticket item, you must weigh how essential the expense is against the idea of getting a loan. You’ll need to decide for yourself if a personal loan is your best bet, or you’d rather wait a year or two to make that big purchase or take that vacation.
4. Paying Medical Bills
Many people who don’t have a solid financial status resort to personal loans after suffering a serious injury or illness.
Major auto accidents and health conditions like cancer, heart attack, or stroke can cause high medical bills. You may have your insurance covering a significant portion of your expenses but think about those who don’t have health insurance. A personal loan may help them overcome unforeseen medical challenges in terms of finances.
5. Unexpected Expenses
Did your car break down, indicating that it needs some major work done?
Did your air conditioner stop working during summers?
Maybe your house got damaged during the storm, or perhaps a family member passed away recently, and you have to plan for their funeral.
You might not be ready to carry the burden of these expenses. This is where a personal loan comes in as your savior. It serves as a safety net, saving you from a major setback you didn’t see coming.
6. Starting a Small Business
This is one of the most common reasons people get a personal loan. Everyone wants to become their own boss and lead a successful entrepreneurial life, but not everybody has enough money to take the plunge.
Personal finance experts believe that a personal loan is an excellent option for someone who wants to start a side business, particularly a home-based venture, without giving up their 9 to 5 job. This loan serves as seed money that you may require to buy essential equipment and tools. The amount you need may not be enough to apply for a business loan, but a personal loan would work just fine.
7. Credit Building
A credit builder loan is a type of personal loan that helps people establish a positive payment history and improve their credit score. If you have a bad credit score and want your credit report to look good, it’s a good idea to apply for a personal loan.
Borrowing money is complicated, and the reasons for taking out a personal loan may be different for everyone. The good thing is that they offer a free hand in desperation and emergencies by providing access to instant cash. From needs, luxuries, and emergencies, these loans can help you pay for anything!
If you’re interested in getting loans with Nifty, you can determine estimated repayments with the Personal Loan Calculator to gauge if it’s the best option for you.