Personal loans are so flexible and one can avail of the approved money to meet different expenses like home repairs, wedding expenses and more. Different lenders offer personal loans based on various rules. However, there are no rules on how the applicant spends the loan amount. To avail of a personal loan apply online or offline and present the necessary documents. The process is so simple and convenient, making it the most feasible option for immediate expenses.
Encountered Benefits
Market scenarios are subject to constant fluctuations and have a significant impact on the common man’s income. Rent is one of the largest monthly expenses and draws the most from everyone’s income. In case there are discrepancies in paying rent, one can avail of personal loans to pay the rents. The following are some benefits of paying rents with personal loans.
Improved Credit History
Loans have a huge impact on the applicant’s credit history. For individuals with existing credit history, availing of a personal loan can add weight to it. Paying the EMIs without missing even a single instalment builds excellent credit history, which can make it easier to avail of loans in the future.
Borrowing Range
In most cases, applicants would be eligible for more than what they actually need. This is because the lenders consider the applicant’s income and credit score in the first place. Some of the best personal loan lenders allow negotiations on the interest rates and LTV in case of a good credit score. This gives a chance to the applicants to further increase their grant amount.
However, it is best to take only the required amount. Most people try to take all the amount that can be granted and find it hard to pay the EMIs later. So, one must be well versed with the exact requirement and abide by it. Borrowers can use these funds carefully to cover their expenses for a longer duration, say six months or one year, unless it is a burden.
Rent Negotiations
Applicants can talk to their landlords and try to ask for discounts as the payments can be made in bulk. Most landlords usually consider giving discounts to tenants who make advance payments. It becomes more advantageous in case the whole lease amount is paid at once. So, paying rents with personal loans can help save money on rents in the future.
Encountered Drawbacks
While these are some perks of using personal loans to pay the rents, there are disadvantages too. Since a personal loan could be used for any expenses, there is no guarantee that the funds would be used for the intended purpose. The following are some drawbacks of the loan:
Interest on the Loan
Personal loans require the applicants to pay the interests regularly through EMIs. In most cases, these EMIs are far more than the rent amount to be paid. This way, a personal loan would become a burden and might lead the applicant into debt.
Financial Needs
Sometimes the applicants might underestimate their expenses and borrow less than what they need. This, in maximum scenarios, leads to unanticipated costs. In worst cases, the applicants might unknowingly spend the entire amount on a different purpose. As in, the rent purpose isn’t solved, leading to an additional burden on the applicants.
Debts
Personal loans are one main reason through which the applicant might end up in debts. Since there are no rules on how the grant amount has to be spent, borrowers can use the money for anything and everything they want. Using it for other expenses lead to additional burden and debts. Moreover, the loan EMIs are often more than the rent, as mentioned above. This could also land the applicants in debt.
Though a personal loan can be used to pay the rent, it might not always be the best choice. The key to deciding on personal loans is to know how long it would take to repay the loan. If it is a short-term requirement and you are sure of repaying the loan soon, personal loans work the best. Otherwise, it might be more of a liability than an aid. In such cases, it is better to answer the following questions:
- Is it possible to pay the loan and EMIs on time?
- Are there any previous loans or debts?
- Is the place affordable?
- Is it possible to bear the other expenses without burden?
If the responses to all these questions are positive, one can proceed with the loan. Before anything else, it is required that the applicant considers different lenders available in the market. He/she can consider different factors, including additional charges, interest rates, LTV, loan tenure and others, to decide the best personal loan lender.
Once the lender is finalised, the applicants can proceed further. To avail personal loan apply online or offline as per convenience. Some lenders offer different options for the discussed application type. It is best to conduct detailed research, as these can help in negotiating with the lenders regarding the Personal Loan Interest Rate, EMIs, grant amount and other necessary things.
Read Also: What is the best way to finance your house in India?
