When financial challenges or significant expenses arise, personal loans offer accessible solutions where savings or credit cards fall short. These online lending tools provide upfront lump-sum cash infusions that borrowers repay in predictable installments over fixed periods. Personal loan apps deliver key advantages over other financing options for both expected life events and unplanned surprises.
From debt consolidation to emergency coverage and everything in between, the versatility and convenience of personal loans fill critical consumer needs for on-demand financing. In the section below, we’ll discuss the reasons to use a personal loan app.
Reason 1 – Financial Emergencies
Unexpected costs crop up when we’re least ready, from sudden medical bills to essential home repairs. And forking over several thousand rupees cash on the spot is difficult without savings already set aside. Even maxing out credit cards means draining future income on painful interest rates.
That’s when the personal loan app comes to the rescue! These online lenders often put funds straight into your bank account on the same day. Getting set up takes just minutes from your phone. Download a top-rated app, input some personal details, and you’re on your way. Requirements are minimal, and approval time is usually quick, depending on income and credit score.
Compared to pleading with family/friends or predatory payday loans, personal loan apps serve up aid with reasonable repayment terms. So they can provide real financial security blankets when emergency needs pop up.
Reason 2 – Consolidating Expensive Debt for Breathing Room
From over-limit credit cards to high-interest personal loans, living paycheck-to-paycheck while scarcely covering minimum payments is exhausting.
Continually chipping away at multiple debts bleeds you dry on interest payments while barely making dents in what you owe. But personal loan apps offer a ladder to climb back out instead.
By rolling multiple existing debts into one convenient personal loan, you benefit in three ways:
- Lower monthly outflow by 30-40%
- Reduce overall interest rates
- Condense repayments into 1 easy EMI
Reason 3 – Finance Major Purchases the Prudent Way
Funding significant purchases 100% in cash is tough if money is already tight. And charging thousands on credit cards means swelling payment minimums you probably can’t afford. This is where personal loan app shines.
Since footing entire costs upfront may not be realistic, personal loans offer more flexibility with predictable EMIs. You gain the benefit of the purchase sooner without fully draining your accounts. Locking in set repayment tenure also assists in planning and budgeting.
For example, ₹1.5 lakhs can get you that dream Europe holiday you’ve envisioned. A personal loan disburses the funds upfront, while a 2-3 year repayment period fits your unique budget. Beautiful memories without the financial hangover!
Reason 4 – Boost Credit Score With Responsible Borrowing
Higher scores qualify borrowers for bigger loans at lower interest rates over time. But did you know using personal loans judiciously can actively strengthen your score? It’s true!
As top-tier personal loan apps report directly to CIBIL and credit bureaus, maintaining a spotless repayment history positively impacts your credit profile. Timely monthly payments display financial discipline banks want to reward with better rates.
Your debt-to-income ratio may fall below 40% as existing debts get consolidated. This further qualifies you for additional loans like home and auto financing.
Watch your score climb over months as bureaus update your credit utilisation ratios and payment consistency. Then enjoy the fruits of your labour when lenders extend more credit on favourable terms, thanks to your high score!
Reason 5 – Seed Credit History From Scratch
Personal loans efficiently establish initial history and baseline scores if you’re just beginning to access credit. This then unlocks better loan options later as you build robust credit health.
Opening multiple credit cards with high limits too fast tempts overspending, so restraint is advisable. However, taking out one starter personal loan instantly creates your first positive tradeline. Making timely repayments over 12-24 months displays financial accountability.
Let’s consider an example. Say you secure a ₹50,000 personal loan fresh out of college. Diligently paying EMIs as scheduled for just 1 year alone could lift your score from nil to 700! That is not bad for a credit newbie.
This fast-track impact sets you up nicely for bigger future loans on favourable terms. Having strong digital lending partners by your side brings stability and possibilities.
The Bottom Line
Personal loan apps open up “instant money” channels no matter your financial situation or credit history. Easy sign-ups and quick electronic disbursals offer convenience in today’s increasingly cashless society.
Whether surprise medical bills crop up or you wish to finance a dream purchase, access to credit responsibly empowers all of us. Compare rates in minutes to evaluate the best loan offer for your needs. Leveraging personal loans to overcome obstacles can provide financial lifelines when you need them most.