Sometimes an expense might come knocking at your door that you are unable to afford. If such a situation arises, availing of a personal loan becomes an excellent way to get the necessary financial assistance. Along with providing funds in your hour of need, personal loans can also help you save money in the long run.
Given below are five ways that a personal loan can help you save money.
1. Consolidation of Debts
If you are finding it tough to pay off other high-interest debts, then availing of a low-interest rate personal loan is a great way to pay them off. For instance, credit cards usually have a high-interest rate as compared to personal loans. Therefore, you can apply for personal loan and use the loan amount sanctioned to pay off the credit card debt in a lump sum.
2. Tax Benefits
Taking a personal loan from a lending institution doesn’t provide any tax benefits. But, if the loan is used to make a down payment for a house, then you can claim a benefit of tax deduction under Section 24B of the Income Tax Act 1961. If you have taken the loan for home improvement, then also you are eligible for claiming tax deduction under Section 80C. However, to enjoy tax benefits, you must have all the necessary documents and receipts to support your claim.
3. Improving Credit Score
The inability to repay your loan on time can increase your chances of being tagged as a defaulter, which ultimately harms your credit score. Defaulting can also happen if you have credit card debt and are unable to make timely repayments. In such situations, personal loans can be of big help. Once you have used a personal loan to pay off your credit card debt, you can repay the loan in comfortable EMIs within the repayment tenure. Doing this will enhance your credit score. Taking a personal loan can also diversify your credit type, which will further benefit your credit score.
Additional Read:- Why a Personal Loan is Known as a Loan for Emergency Needs
4. Meeting Big Expenses
In life, there might come a time when you need a significant amount of cash to meet unforeseen expenditures. To meet these sudden demands, you can apply for personal loan with a lender. By applying for a personal loan, you will not only get quick cash but will also be able to repay the loan in small instalments over a comfortable tenure. Just remember to compare personal loan interest rates offered by various lenders so that you pick the one that best suits you.
5. Freedom From Extra Charges
Credit cardholders often complain about their credit card companies charging them additional hidden fees, but with personal loans, you won’t face such problems. The best part about choosing a personal loan is that before signing the loan agreement, you can look into the details of the agreement. Doing this allows you to make sure no extra charges are being added to your EMI.
Additional Read:- Easy Financial Planning with a Personal Loan EMI Calculator
Tata Capital provide personal loan for self-employed as well as salaried-individuals. For your convenience, we also offer a personal loan calculator on our website. The personal loan calculator can assist you in making better-informed decisions by helping you calculate your EMI accurately. By using our personal loan EMI calculator, you can get a better idea of your monthly expenses. As soon as you have checked your personal loan eligibility, and calculated your EMI, apply for a personal loan with us to fix all your financial issues.