How personal loans can help you align expense management

Financial hardships can occur anytime, anywhere - such as emergency medical bills, urgent car repairs, or job loss. They often occur when you least expect them or least afford them. They can take a toll on your other basic expenses - leading to disturbed pocket budget and inconveniences.

According to a recent survey, the average emergency costs anywhere upward of $2,500. And, most people can’t cover even a $1,000 emergency in cash - which is a huge problem. In the report, only close to 40 percent respondents said that they have the ability to pay for the expense with their savings.

If you are a part of the majority people who have difficulty paying for an emergency out of pockets, consider availing instant personal loans. With a flexible repayment plan and accessible EMI options, a personal loan can be an effective way to cover for emergencies and manage expenses considerably.

What is a personal loan?

A personal loan is a type of unsecured loan - meaning there is no need of any security or collateral to avail these loans. They typically come with a fixed interest rate, which is used to consolidate the debt ot make a large purchase. Depending on one’s credit profile, one might be able to even qualify for a lower personal loan interest rate- that is, if the credit score is above 750 and they have a good repayment history.

There are several factors which account into getting an online personal loan in India - some of which include an individual’s credit score, monthly cash flow, credit history, debt-to-income ratio, and stable source of income, among others. The stronger your credit profile, the lower the rate of interest you can expect.

Some benefits of availing small personal loans:

1. Lower interest rate than credit cards Most personal loans come with rate of interests that are much lower than that of credit cards. This is especially the case if you have a good credit score.  It is not surprising to pay around 15% APR on credit card balances. However, if you hold a good credit, you just might be eligible for a personal loan with an excellent APR of approximately 6% - no that is a big difference, especially if you’re making a huge purchase.

2. Debt consolidation With the lower interest rate that personal loans offer, one can use this amount to consolidate high-interest debt, if any. Depending on the situation, one might be able to pay off several small debts, which have high interests - like student loans - by using a larger personal loan.

Now, debt consolidation has a lot of benefits. When you consolidate remaining debt with personal loans, you can save a ton of money on interest rates and pay off what you owe faster. Apart from that, you can also combine different loans in one place, under the same umbrella. This can be especially helpful if one is struggling to make timely payments and have a hard time keeping track of each account. Hence, combining everything together will help people manage their expenses better and save money in the long run.  

3. Flexible usage One of the best advantages of personal loans is that an individual can use the loan amount for just about making any purchase. Whether it’s to start a business, making home renovations, or even planning a wedding - one can use this amount for any personal or professional task. Unlike other loans like home and car loans, personal loans are flexible and hence, convenient.

To apply for hassle-free online personal loans, one of the best NBFCs out there is Clix Capital. It provides quick approvals on personal loans with minimal documentation required and easy eligibility criteria to help different types of people meet their expense needs.