An instant personal loan online is one of the easiest and cost-effective ways to get money when you need it to meet a sudden financial emergency, fulfil an obligation, or give shape to some of life’s most important dreams.
Generally, all loans in India can be divided into two categories – collateral-free and with-collateral. When you apply for a with-collateral or secured loan, the lender asks for collateral security and approves an amount of up to 90% of the asset’s market value. It is a general perception that a collateral-free loan, like an instant personal loan online, charges a little higher interest rate than a secured loan. However, contrary to popular belief, a personal loan can be the best way to save money, only if you know the right way to approach it.
Read this article to discover the top five ways in which an instant personal loan online can help you to save money.
Table of Contents
5 Ways Personal Loans Can Help You to Save Money
1.Shape Up Your Financial Profile By Clearing Debts
Quite often, you get lured by credit cards or other forms of readily available debt that only keeps piling up. When the unpaid amount reaches an absurd level, the lenders force you to pay up the amount or face legal action. Not paying up the dues on time can also create a deep dent in your credit score, and may make further loan approvals difficult.
An instant personal loan online is the best way to get cash at a low rate of interest, which you can use to settle off the existing debt. A personal loan is a one-stop loan for clearing any bad debt. By clearing off your current dues, you can not only bring your credit score on track but also apply for new loans.
2.Avail the Benefits of Attractive Interest Rates
When you compare the interest rates of an instant personal loan online with the interest rates of a credit card, you will find a massive difference between the two. Higher interest leads to more EMI amount, which results in fewer savings.
Additionally, the processing fee for a personal loan is also lesser than many other loans. Hence, by availing a personal loan, you can fulfil the same aspirations that earlier required you to shell out more money as interest repayment cost.
3.Flexible Repayment Plans
An instant personal loan online is an extremely flexible loan, which makes it possible for you to choose the frequency and the type of loan repayment you want to make. If you feel that your income is likely to remain stable throughout the loan term, you may choose to pay the same EMI every month, throughout the tenure. You may also opt for the step-up option, where you need to spend less amount in the beginning and increase the amount gradually.
4. Ramp Up Your Credit Score
Credit score plays a prime role in determining the interest rate, tenure, and amount of your loan. A high credit score offers you several benefits, like a low rate of interest, longer-term, less processing fee for a personal loan, and additional perks.
An instant personal loan online is an excellent way to increase your credit score and enhance the chances of future loan approvals. However, to improve the credit score, you should keep paying the EMIs without fail. Not paying the EMIs on time will decrease the credit score instead of increasing it.
5.Save Income Tax
An instant personal loan online can allow you to save taxes every year. However, to be eligible to claim tax benefits, you have to use it on home construction, home improvement, or for business purposes.
By using the funds for constructing a new house, you can claim tax deductions of up to INR 1.5 lakh. If you use the funds on home renovation or improvement, the income tax laws allow you to claim tax benefits of up to INR 2 lakh. And, if you are self-employed and spend the funds on any purpose related to your business, then you may claim a tax deduction on the interest component of the EMI.
An instant personal loan online not only offers you money within a day but also helps you in saving money. Read the terms and select the right lender to extract the maximum benefits out of the personal loan.