5 smart uses of personal loans beyond debt consolidation

Rapid digitalisation and evolving lifestyles are transforming how personal loans are distributed and used in the country. Aspiring borrowers are no longer rooted to outdated norms. New norms mean borrowers are increasingly availing themselves of personal loans to meet ambitions and dynamic projects.

Lending platforms are now focusing on making their approval processes more robust and transparent. The aim is to seamlessly approve loans, monitor defaults, and ensure on-time repayments. Due to technological advancements and the use of artificial intelligence to disburse loans, borrowers are discovering unexpected ways to leverage this multipurpose financial tool.

Personal loans can be used for various purposes, such as weddings, business needs, and debt consolidation. Still, in addition to these traditional uses, loans can also be used to meet our creative ambitions and improve the overall quality of life.

Here are five uses of personal loans that you might not have considered:

Boosting your career with skill-building courses through personal loans

Working professionals and young graduates can strategically plan personal loans and use them to develop their skills. For example, prominent YouTubers provide paid courses on artificial intelligence, coding, and web development. After proper research, aspiring individuals can avail themselves of such courses. They will also be provided with certificates upon completion of the course, and such certification and focused courses can really boost their career prospects and pay packages.

An artificial intelligence certification priced at ₹1.5 lakhs, for example, is now suddenly within reach, and even students can avail themselves of it to foster career expansion. Such a certification can open doors in the technology domain.

Finance e-bikes, EVs, and green upgrades with personal loans

Taking the initiative and switching to sustainable transportation is not just an environmental gesture. It is now turning into a household ambition. Families are moving towards environmental initiatives and ways to protect nature.

Borrowers have started using personal loan proceeds to purchase energy-efficient two-wheelers, e-bikes, or even to install solar kits and panels in housing townships. This unique pathway of focusing on pollution reduction and energy conservation is getting its due support from the state and central governments in one form or another. Hence, using personal loans for eco-friendly pursuits can be an extremely futuristic and creative decision.

Vibhore Goyal, founder of OneBanc, says, “Personal loans are often seen as a loan of last resort. Used creatively, they can fund skills (such as ₹2.5L AI certification), health ( ₹4L surgery), or even green assets ( ₹1.2 lakh e-bike)—they are levers of progress in a country with household debt at ~14% of GDP (~60% of GDP in developed markets).”

Health and wellness upgrades through personal loans

Medical inflation in the country is rapidly eroding insurance caps. That is why it has been witnessed time and again that health insurance plans are failing to meet hospital expenses. Due to this, more and more households are dependent on personal loans to meet expenses for elective surgeries, dental implants, major operations, etc.

Quick approval and seamless disbursals are key considerations here. Therefore, availing loans for wellness and health upgrades, not only paying for procedures but also investing in healthy foods, gym essentials, and drafting a diet plan for long-term wellbeing, can be considered a prudent option.

Kickstarting your small business or side hustle with personal loans

Starting a new business and entrepreneurship in any domain is no longer for those with ample financial resources. Young founders, YouTubers, business store managers, and others who are focusing on building small businesses use personal loans as seed capital.

Hence, for example, if an individual aspires to start a new small-scale business, they can take loans to meet rental expenses. Similarly, if someone aspires to start a new social media channel, they can take a lucrative loan to acquire equipment such as cameras, tripods, webcams, headphones, and other similar tools to initiate their channel. Flexible usage conditions and terms permit borrowers to bypass the red tape of traditional business finance.

Creating a productive remote workspace using personal loans

Ever since the COVID-19 pandemic, remote work has gained traction. The rise and consolidation of remote work have begun a new wave of home upgrades. Many now use personal loans to purchase ergonomic furniture, set up top-of-the-line broadband connections, and try to create smart workspaces. These well-planned expenses facilitate career growth, enhance productivity, and boost comfort in everyday life.

These are just a few of the creative uses of personal loans that aspiring borrowers can look forward to. Still, the list above can be extended and is not exhaustive, depending on the borrowers' creative vision.

In conclusion, as a sound borrower, one should also clearly acknowledge and understand personal loans as products. These loans have pitfalls and complications, such as high interest rates, hidden charges, debt trap risk, impact on credit score if payments are missed, and other associated complications with borrowing. Any personal loan should only be availed after proper due diligence and professional guidance from a financial advisor.

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