For many people looking for an immediate financial answer, a personal loan is their favourite option. A personal loan might be useful in cases of unforeseen expenses because it is an unsecured loan that requires no security. Unexpected costs have a tendency to deplete your emergency savings and put a lot of stress on your financial status. Therefore, it could be preferable to cover these unforeseen costs with a reasonable personal loan. We’ll go over the fundamentals of a personal loan, why you should choose one, the kinds of unforeseen needs it can help with, and how to make one cheap.
What is a Personal Loan?
A Personal Loan is an unsecured loan that can be utilized for any personal or professional financial requirements. There is no particular limitation on which the loan amount can be utilized. For instance, credit success offers Personal Loans of up to Rs. 30 lakh at an attractive interest rate starting at 9.99%. Know more about credit success Personal Loans. You can take a loan amount as per your requirement and use it towards your personal and professional goals.
Why Opt For A Personal Loan In Case of Unplanned Expenses?
A Personal Loan is one of the most popular loan types among consumers. These are the key reasons why you should opt for a Personal Loan in case of unplanned expenses:
Quick & easy processing: Personal Loans do not need much time for processing. The process can be completed quickly with easy documentation.
Fast approval: The time for approval of a Personal Loan is not much. As a result, it is always better to opt for a Personal Loan when you are looking for quick funds for any unplanned expense.
Affordable interest rate: Personal Loans can be availed at attractive interest rates. The interest rates at credit success for Personal Loans start at 9.99% per annum.
Higher loan amount: You can get a Personal Loan of up to Rs. 30 lakh to fund your unplanned expenses. The higher loan amount helps in meeting a variety of requirements.
No collateral required: You do not need any collateral for taking a Personal Loan. This is one of the primary reasons why customers prefer Personal Loans against any other categories of loans.
Online process: Many lenders offer online applications and approval of the Personal Loan process which makes it a hassle-free experience for the customer.credit success offers a 100% online application and approval process for customers.
personal loan for unplanned expenses
Unplanned Expenses That Can Be Covered By A Personal Loan
There are a variety of unplanned expenses that can be covered by a Personal Loan. Some of the unplanned expenses that can be covered with the help of a Personal Loan are as follows:
Medical emergencies
Medical emergencies can burn a hole in your pocket. Even with medical insurance on your side, you can face a situation where the expenses are more than the insurance cover. In such a situation, you can opt for a Personal Loan.As funds are disbursed quickly and in a hassle-free manner, it also helps in managing stress during such testing times.
Relocation expenses
Moving to a new house, city or country can be an exciting but also a costly affair. Your reason for relocating can be personal or professional; it is a stressful exercise either way. At the same time, if the planned expenses go haywire you can opt for a Personal Loan to make up for the shortfall. A Personal Loan is very useful in this scenario as you can get quick access to funds in a new land.
Higher Education
Expenses for kids’ higher education are planned but with the increasing costs, you cannot be certain about the kind of financial commitment you would have to make. Also, there could be some changes along the way in career preferences and the kind of educational institute your child will opt for. As a result, there can be a mismatch between the available funds and the actual expense that you will incur. A Personal Loan is very useful in such a situation as you can access additional funds as per your requirements.
Home renovation
When it comes to home renovation, you would notice that the planned cost is much less than the actual expense incurred. As building a home is a dream for many, there could be a situation where you require funds due to the ever-increasing home renovation bills. In such a scenario, you can always opt for a Personal Loan to meet the funds requirements. Be it fitting and furnishings, primary parts of the house, or a complete overhaul, a personal loan can help you in all these aspects of home renovation.
Unplanned vacation
A dream vacation is on almost everyone’s bucket list. You can face a situation of realizing the goal of your dream vacation in an unplanned scenario. There is only one limiting factor between you and your dream destination – balance in your bank account at that very moment. But not to worry, you can always opt for a Personal Loan which will get you additional funds with which you can go on your vacation with ease and peace of mind. With minimal documentation and easy approvals, you can soon be on your way to the airport with a personal loan by your side.
How to Make Personal Loans Affordable?
One common myth is that a Personal Loan attracts a very high interest rate and can burn a hole in your pocket over some time. It is important to note that you can make a Personal Loan affordable by taking the right steps. You can make personal loans affordable by taking the following steps:
- Include all income sources
It is important to disclose all your income sources to the lender. As a Personal Loan is an unsecured collateral-free loan, the lender has to assess the repayment capability of the customer by taking into account elements like income, job history, etc. These help in providing an assessment to the lender about the financial situation of the customer. Inclusion of all income sources in addition to the regular salary or business income helps in giving more confidence to the lender about the repayment capability of the customer. Additional income sources like income from a side business, rental income, etc help in building a more robust profile for the customer. As the rate of interest that the lender will charge also depends on the overall financial situation of the customer, by adding all income sources, you can secure a Personal Loan at a more affordable interest rate. The idea here is that you have enough income and sources of income to pay back the Personal Loan that you are taking from the lender. If the lender is confident that you have a strong profile and would be able to return the money easily, it will be more than happy to extend you a personal loan at an affordable rate. - Maintain a good credit score
It is important to have a good credit score to get a Personal Loan at a lower rate. A credit score reflects your credit profile by way of a three-digit numeric number that can range from 300 to 900. A score above 750 is good enough to get you a personal loan at a competitive rate from a reputed lender. You need to maintain a good credit score as it helps in getting a personal loan at competitive rates from a lender. The higher the score, the better are your chances of getting a loan at a low-interest rate from a lender. The lender gets more confidence about your repayment capacity if the CIBIL score is in the higher spectrum. Maintaining a good credit score helps in getting a better deal from the lender. - Include a co-borrower
It is always better to rope in a co-applicant or a co-borrower on your loan application. By adding a co-borrower, you are not only able to add to the overall eligibility, but you can also get a good deal at a better interest rate. It is always better if the lender allows you to add a co-borrower to your loan application. If that is a yes, you should always opt for a co-applicant on your application. A co-applicant to your loan application can be a family member or a friend. By a co-applicant that also has a strong credit record, a lender’s confidence is increased and you can get the loan approved at better terms and interest rates. The primary objective of adding a co-applicant in a Personal Loan is to increase the probability of repayment of the loan. The co-applicant provides a further guarantee of repayment in case the borrower defaults on the loan because of any reason. For a borrower, the good part is that the final loan amount is ascertained after taking into account the income of the main applicant and the co-applicant. Also, you may be able to secure a loan at a better rate with a co-applicant added to the application. - Opt for the right lender
A Personal Loan is offered by several banks ad NBFCs and you can get confused by the several names in the industry. It is important to be clear about what you are looking for as you finalize the lender. The interest rate being charged is one key metric on which you can select the lender. It is equally important to consider factors like service, delivery, other charges, etc to finalize a lender. For instance, we at credit success offer end-to-end doorstep service with no hidden charges and no pre-payment/foreclosure charges. These are some of the offerings that make us one of the most preferred financial services brands in the country. Know more about credit success Personal Loans. You need to opt for a lender that not only offers attractive interest rates but also does not add to the cost of a personal loan by either providing poor service or levying additional charges. All these measures help in making the experience of taking a Personal Loan for an unplanned expenditure more affordable. - Opt for part-payments
A Personal Loan is expected to be paid off in EMIs with interest to the lender.It is important to try and make part-payments as and when you have surplus funds. By making regular part payments, you would be able to get your principal down over a period and reduce your overall interest outgo on the personal loan. You can also opt for making a regular payment over the EMI amount as per the terms of your loan and make the overall experience affordable for you. Part payments are very important in reducing your interest component on the loan. As a personal loan runs for a few years, with the increase in income, you can opt for making regular part payments and reduce your financial burden even for a personal loan that was taken for an unplanned expense. - Keep a strong track record
It is very important to maintain a strong track record and pay all EMIs on time. Any gaps in payment of EMIs may not only attract charges from the lender which will increase your expenses further but also impact your credit score. Therefore, it is important to keep a strong payment record with the lender and continue to pay the outstanding EMIs on time.
These are some ways by which you can manage your unplanned expenses with help of affordable Personal Loans. As mentioned, credit success offers Personal Loans at competitive interest rates and best-in-class service. You can take our word for speedy approvals, zero hidden charges, doorstep service, and flexible repayment plans among other good things that will make it an experience to remember. Click to know more about credit success Personal Loans.
FAQs
1.What are unplanned expenses?
Unplanned expenses refer to unforeseen or unexpected costs that arise without prior preparation or budgeting. These can include emergency medical bills, home repairs, car repairs, emergency travel, or any other unforeseen financial obligations that require immediate attention.
2.What are a few examples of unplanned expenses?
A few examples of unplanned expenses include:
- Emergency medical bills
- Unexpected job loss or reduction in income requiring financial adjustments.
- Car repairs or accidents
- Home repairs due to damage or malfunction
- Unexpected travel expenses
- Appliance or electronic equipment repairs/replacement
3.What’s the best way to pay for unplanned expenses?
The best way to pay for unplanned expenses is to utilize savings or an emergency fund if available, but if those options are not sufficient, a Personal Loan can be a better choice as it provides a structured repayment plan, lower interest rates compared to credit cards, and allows you to manage the expense without affecting other financial obligations.
