Why do Indians raise instant personal loans? From home renovation to holiday travel, here are the top 8 reasons | Mint

Raising an instant personal loan is not uncommon anymore among middle-class salaried people. Be it a financial emergency, going on a holiday or buying a luxury item, people have no qualms about borrowing money to meet their requirements as soon as they arise.

Being an unsecured loan, a personal loan does not require an asset as collateral, but the interest rates are usually higher as compared to other categories of loans such as a home loan or a car loan.

8 common use cases for instant personal loans:

1. Wedding: As often stated, hosting a wedding is too important an event to postpone due to a lack of financial resources.

2. Emergency: When you face an emergency on the personal or professional front, you can raise a personal loan to address it. The emergency could be of any nature such as someone you know closely became acutely ill, or you lost money in your business, and so on.

3. Home renovation: Suppose you bought a new house and had to raise a home loan to buy it. Soon afterwards, if you want to renovate the house or make some important installations, a personal loan will come in handy.

Since you have already exhausted your home loan limit, you might opt for a personal loan.

4. Children’s education: Typically, people take education loans to pay tuition fees. However, when you need access to urgent funds to pay for your child’s fee while you don’t intend to burden the child with a loan, the feasible option is to raise a personal loan.

5. Helping a close one: There could be a number of situations in which a close friend or a relative is facing financial hardships. In such cases, you could raise a personal loan to help the person in need.

6. Buying an expensive gift: Sometimes, buying an expensive gift for your loved one is important to make her feel special and privileged. And in such a case, if you are short of funds, you could think of raising a personal loan.

7. Vacation: You may be planning to go on a holiday to an exotic place in India or abroad and you fall short of funds. In such a case, you could raise a personal loan. Although not everyone accepts the idea of raising a loan for this and similar avoidable indulgences, this practice has incidentally picked up pace.

8. Fulfilling your passion: Sometimes your passion is too close to your heart to quell it for want of money. For instance, you may want to spruce up your motorbike with some nice accessories, which are too expensive for you to afford. What would you do? Maybe raise a personal loan.