10 reasons why people take personal loans

Running short of cash and the need is immediate? Dan’t worry, there is always a personal loan in the offing.

Personal loans are, of late, not too difficult to access if you have a relatively stable source of income. In fact lot of banks & NBFCs have made a good business out of selling personal loans & getting EMIs.

Here are some typical reasons why people take personal loans:

10 reasons why people take personal loans

  1. Managing day to day expenses – Well, I run out of money by month end, so …
  2. Paying off credit card debt – Repaying debt at at 12 percent per annum is lesser evil than repaying debt at 36 percent per annum! (You may also like to read – story behind credit card debt and personal loans.)
  3. Buying a house – While there is home loan, it may not be enough to fund your dream home.
  4. Renovating a house – Home needs repairs (may be urgent, may not be urgent) but I am short on savings.
  5. Vacation – An expensive, exotic, exquisite European vacation which you always deserved!
  6. Down payment before starting an EMI – No 100% funding fore home/ car, so bridging that with help of personal loans.
  7. Medical Emergency – It may come without announcing and you may be uninsured or under insured.
  8. Wedding – A fat grand wedding which everyone will remember for times to come …
  9. Education – Usually for child (usually in an expensive college), occasional for self/ other family members. But what is the ROI?
  10. Unforeseen circumstances – Unforeseen circumstances are, well … unforeseen.

And, a good chunk of people opting for personal loans fall into one or more of these categories:

  1. They have sudden need for money but not have enough savings
  2. They have enough savings but choose not to use them (Virtual Debt)
  3. You don’t need money urgently, but if you have money you can enjoy life! (buy a gadget, go on vacation etc!)

Do you fit in any of these categories?

Whether personal loans are good or bad, or whether do I suggest anyone to take it – No prizes for guessing my answer!

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