Everyone goes through a financial crisis at some point in their life. At such times, availing a personal loan might make sense as they provide quick cash and can meet the immediate expense without blowing up all your savings. If you’re looking to consolidate high-interest debt or finance a large expense you can apply for a Bajaj Finserv personal loan and get the financial assistance you need. You just need to fulfill the personal loan eligibility criteria and documentation process. Once approved the loan amount will get disbursed in your account. Most personal loans are unsecured, meaning you are not required to pledge collateral on loans. If used properly, personal loans can help you save a lot of money.
What is a personal loan?
A Personal loan is a kind of unsecured loan that helps you meet your current financial needs. These loans could be used for anything from credit card debts consolidation, to refinance student loans, wedding expenses, home renovation, travel expenses, etc. While a personal loan might help you take care of unexpected expenses, they can also help you save money.
The following are some of the ways persona loans can help you can save money.
- Lower interest rates
The rate of interest on a personal loan is comparatively lower than the credit cards. Therefore, personal loans can be used to make purchases in lieu of credit cards as a money-saving strategy.
- Debt consolidation
Debt consolidation means opting for a loan to pay off other liabilities and debts. To avail a huge, low-interest rate personal loan, you need to pay off your other small, high-interest rate debts. By doing this you can save money on a high-interest student loan or your credit card bill, for example, by repaying them faster or at once using a personal loan. Remember to check with your bank about their prepayment policies as some money-lending institutions charge penalties or charge additional fees for not completing the loan tenure.
- Claiming tax benefits
While availing a personal loan you can claim tax benefits. Under Income Tax Act, if a personal loan is availed to renovate a house or make a down-payment for it, then you are eligible to claim tax deductions of up to Rs. 2 lakhs under Section 24(b). In order to avail of this benefit, you will have to produce proper receipts and documents to the bank.
- Smart repayment plans
You can choose to use the most appropriate repayment plan on your loan on the basis of your current and foreseeable financial status to enhance your savings. For those who are expecting their financial situation to get better in the near future, due to a promotion, for example, can apply for the step-up repayment option. The EMI scheme starts off at low-interest rates that gradually increase over time.
- Cover big expense
With an instant personal loan you get the liberty to repay the money over the years in small installments. Since the interest rates on personal loans are quite low, it is a cheaper way to cover big purchases.
- Improve credit score
When you avail a personal loan, the complete loan amount is to be repaid in a fixed period. And if you repay the loan in full at a given time, it not only lower your credit utilization ratio but also improves your CIBIL Score.