Possible Reasons to Apply for a Private Loan

There are many reasons why you may choose to take out a personal loan. You may wish to get the OnePlus 9 Pro for yourself and take out a loan of ₹70,000 to finance your purchase. On the other hand, someone may require an additional ₹5 Lakhs to fund his Master’s degree abroad. They may apply for a personal loan and use the amount for this purpose. But what happens if you don’t qualify for a personal loan in the first place? There’s another option you can try- a private loan (also known as a private finance loan). Such loans are given out by institutions or private individuals that don’t fall under the formal banking ecosystem. Here are four reasons to apply for a private loan:

1.To Stay Away from Credit Cards

Finding yourself in the middle of a cash crunch is very common, especially if it's near the month-end. In such a scenario, it can be very easy to put all your expenses on your credit card until you receive your salary. There's even the option of a payday loan – it gives you the money you need over a short period, and you pay it back using your salary. Easy, right? Wrong. Both these options are incredibly costly as they carry very high interest rates. The APR on a payday loan could go up to 100%, and a credit card averages around 40%. You could apply for a private loan instead and take care of the cash crunch better.

2.Debt Consolidation

It can get frustrating for those of you who are repaying more than one type of debt simultaneously. For example, you might be paying the EMIs for both your credit card bill along a vehicle loan every month. Both these loans will have different repayment schedules, and keeping track of them can be frustrating. If you're not careful, you may even forget to pay an EMI on one of these loans. This is where private loans come in handy. In this example, you can convert both these loans into a single private loan. You will then have only one fixed EMI to repay on the same date every month. This makes things easier for you and helps you ensure timely repayment too.

3.To Borrow for a Short Period

If you only need a cash infusion for a short period (say, a year), you could apply for a private loan. Suppose you have a recurring deposit worth ₹1 Lakh that will mature in a year. But you need to make a big-ticket purchase right now, and you don't have enough money to fund the entire purchase. In that case, a private finance loan can help you cover the gap without making you compromise on your needs or postponing any purchases.

4.To Help Create a Contingency Reserve

The COVID-19 pandemic has taught everyone the importance of saving as much as possible and having an emergency fund for "rainy days". Since nobody can predict when a rainy day will occur, it's best to have a contingency cash reserve for this purpose. If you're finding it difficult to save or get started on your emergency fund, applying for a private loan is a good idea. But you must ensure you have the repayment capacity for it.

Wrap Up

As you can see, a private finance loan can help you in various ways. If you need to apply for a private loan to take care of your needs, choose KreditBee. Our entire loan application process happens on the KreditBee mobile app, from profile creation to disbursal. You just need to download the app from Google Play, complete your profile, and relax. If you wish to learn more about our private loans, please write to us at [email protected].