How To Use A Personal Loan For Furniture and Appliances
Learn how to use a personal loan for furniture and appliances. Our guide helps you choose the right loan, get approved, and manage repayments.
Furniture gives a complete look to a home. But the costs can run into several thousands, sometimes even lakhs. An easy way to fund the cost can be to use personal savings. But what if an already overburdened person does not have the necessary funds to cover the costs?
In this case a more practical solution will be to take a personal loan from a bank. Since banks and non-banking financial companies (NBFC) are not concerned about the how or where the personal loan amount is used, these loan products can be utilised for consolidating debt, going on a vacation, covering medical emergencies, and also purchasing appliances and furniture.
What Is A Personal Loan?
Personal loans are unsecured advances that does not require the borrower to pledge any security or collateral. These loan offers are based on the creditworthiness and financial profile of the applicant. Mostly banks and NBFCs after approval of the loan request disburse the lump sum amount through NEFT transfer. Personal loans are a good alternative to credit cards because they have lower interest rates.
Personal loans for furniture and appliances can be availed both offline or online. Online personal loans can be applied through the bank's mobile application or through their portal.
Things To Keep In Mind Before Applying For A Personal Loan
A personal loan for furniture or appliances is a much-needed financial support. However, every borrower must consider certain things before selecting a personal loan offer:
• Take Only The Amount Needed:
It is critical to evaluate the precise financial requirement and only then apply for a personal loan accordingly. Borrowing more than what is actually required simply adds to the costs.
All lenders limit the funds obtainable on a loan application based on the income level, profession and repayment capacity of the applicant. While for self-employed individuals the personal loan depends on the profit and loss statement, for salaried individuals the lender reviews the monthly salary and credit history. So, an applicant should always remember to check for the maximum and minimum personal loan funding available.
• Compare Interest Rates:
The interest rate on personal loans depends on the lender. Usually, the interest rates offered by private sector lenders are higher than public sector banks. A comparative analysis also shows that private and public sector banks offer comparatively lower interest rates as offered by Non-Banking Financial Companies.
Likewise, it must be kept in mind that the lending rate depends on the applicant’s credit score, monthly income, occupation profile, etc. So, before applying for a personal loan, one must check the interest rates across different lenders and select the one that charges the minimum.
• Loan Processing Time:Loans are beneficial only if they are delivered on time. Time and again some loan applications may take longer than expected. While in a selected number of cases it can be due to strategic difficulties owing to the remote location of a bank, in most cases the turnaround time of personal loans gets stretched due to the extensive verification process.
• Charges and Other Hidden Costs:
It is the responsibility of the borrower to pay the EMIs on time. Defaulting the payment of an EMI would attract a penalty which varies from bank to bank. Similarly, the banks charge a penalty for prepayment or foreclosure of loan to cover their loss.
While taking a personal loan, the borrower must also check for hidden charges like the origination fees which is typically a percentage of the total loan amount.
Above all it is important to accurately determine the EMI amount and then assess the individual repayment capacity to avoid debt escalation. The loan repayment capacity primarily depends on the monthly disposable income after deducting the mandatory monthly expenses. Lenders prefer borrowers whose repayment obligations are within 50-60 per cent of their monthly income. Hence, those exceeding the set limit may face loan rejection.
Personal loans are multi-purpose loans. They can be utilized for a variety of things; be it for planned expenses like buying home decor and appliances for a new home or for unplanned costs like medical treatment. Borrowing can be a positive experience only when it is undemanding in the long run. For the best results it is idle to weigh all the positive and negative aspects associated with a loan and then make the next move.
Thereafter those who cannot manage without a debt should first and foremost choose a lender that enjoys a good reputation in the market. But before applying one must try to rebuild the credit history.
Life is full of aspirations and to cater to all these needs IIFL Finance offers personal loans. IIFL Finance personal loans can be used to purchase furniture for your new house or update an outdated home appliance. Some features of IIFL Finance Personal loans are no end-use restrictions, minimal documentation and quick disbursals. Moreover, this personal line of credit can be applied both offline and online as per your suitability.
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