Taking a small loan may be frowned upon or you may think getting in debt is a bad idea, but if it’s for emergency situations or if you’re facing a cash crunch problem – it can really help you out.
Small loans are unsecured loans that can range from INR 500 to INR 50,000 and these are helpful in getting past financial tides. Many people apply for small loans instead of asking family or friends and borrowing money. Also, it’s a great way to build up your credit history depending on which financial institution you’re applying through.
Here are 7 legitimate reasons why you should apply for small loans –
1. Meet Medical Emergencies
Medical emergencies are a part of life and there’s no possible way of knowing what could happen. Small loans are a great way to deal with these situations. If you’re waiting for your salary and require instant cash for treatment, a small loan can give you access to the required funds within a short period of time.
Financial organizations are disbursing small loans in just 3 to 4 days and the entire loan application process is paperless which makes it very convenient. From buying medications to booking extra beds in the hospital, medical events can be life-threatening and expenses can pile up. Sometimes you have to take time off work for your loved ones which can cost you money.
These loans help you meet such emergency situations and take the financial strain off your shoulders, at least until you are more able.
2. Build Up Your CIBIL Score
Your CIBIL Score is a number that represents your financial capacity to make repayments on time. Lenders prefer borrowers who have high CIBIL scores when giving out personal and small ones. If you build up a CIBIL score of over 750, you can get lucrative offers and lower interest rates for your EMIs.
However, raising your CIBIL scores requires applying for these loans and making repayments. If you haven’t yet generated a CIBIL score or lack of credit history, you can start working your way up to that.
3. Start A New Business
Entrepreneurs struggle to get instant cash for starting out new ventures. If you don’t have existing capital and banks aren’t willing to give you a business loan, you can apply for a small loan for business purposes. Various financial institutions are willing to give out unsecured small loans to individuals who earn a minimum of INR 15,000 per month and you don’t have to worry about putting up any collateral either!
When you’re building a company from scratch, you’re going to have to hire employees and set up logistics. There are also equipment costs involved along with packing and shipping fees. If you’re providing specific services to your customers, you’re going to need funding to make sure you don’t compromise on the quality. Later, when your business starts turning over bigger profits, you can repay these loans more quickly.
4. Host A Big Wedding
In every culture, it’s a custom to make wedding celebrations absolutely grand. There are unforeseen expenses that come with wedding events and you may find yourself making arrangements for extra guests.
Whatever the case, it never hurts to get additional funding for these big moments. If you’re looking for unsecured loans for your wedding decorations or need to rent out a huge venue, a small loan will help. And you can always pay it back later which is a huge plus.
5. Consolidate Credit Card Bills
If you have multiple credit cards with bills pending and you’re struggling to keep track of repayments, you may consider debt consolidation. Debt consolidation merges all these repayments into a single one which you can clear via a small loan.
The EMIs for the repayment can be split up which makes the entire process very affordable. If you’re in a cash crunch and don’t know which credit card to clear for the month, get a small loan for debt consolidation and club all your credit card bills together.
6. Relocate Somewhere Or Take A Vacation
You may think of going on a vacation or relocating somewhere during the year. If you’re planning to go to Hawaii or traveling to international countries for the first time, there will be a lot of expenses involved. The currency exchange rates vary and hotels are expensive. Small loans can help you go on these vacations guilt-free and you can pay back in EMIs later. What’s unique about them is that you don’t have to give a reason for borrowing the required amount.
If you’re planning to relocate to another neighborhood, packers and movers will charge you a lot. Depending on what furnishings you have or if you’re going to do home renovations after moving into a new apartment. These unsecured loans let you utilize the necessary funding for these various needs. Even if you don’t know what expenses will crop up, the additional line of credit can be useful.
7. Make A Huge Consumer Purchase
You might be dreaming to buy that laptop, gaming setup, refrigerator, or any electronic product. There may be various items on your wishlist which you shy away from because of the high price tag.
What if we told you that you can buy that now and make repayments in smaller manageable amounts every month? Where banks are not willing to give out EMIs, you can opt for small loans and make those big-ticket purchases. There are brands that even give exclusive offers and provide discounts when buying these products via loans. The repayment tenures are flexible and you don’t need to show any collateral for buying them.
A small loan may not be for everyone but it’s certainly a great way to manage financial expenses. When you’re first starting your career or going through a cash crunch, you can avail for these loans through a reputed financial organization. The maximum tenure for these loans can last up to 18 months and it depends on how much you’re borrowing, which makes it very convenient.
Since no paperwork is required, you can apply for these loans online. Additionally, you require basic documentation like bank statements, proof of income, and identity, and there are no processing fees involved for the application process. Try out a small loan today and see the difference. You’ll be surprised how easy it is and how it can greatly improve your CIBIL score once you start making repayments.