Many people attach a negative sentiment to loan, thinking it is only a burden. However, this is not true. Depending on when you borrow money and how you use it, loans can also work in your favour. However, all you need is prudence and planning to get it right.

So, to help you make positive use of loans, let us tell you more about it-

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Ways to Use Loans to Avoid Debt Trap

The most important thing about taking up a loan is to make sure that you don?t get caught in a debt trap. For this reason, it is essential to use debt smartly, so that it helps you get some value out of it and does not lead to wasteful expenditures. Towards this, it is imperative that you assess your financial reserves and needs, and then decide if the loan will help you or not. To help you use loans in an advantageous manner, we have listed below four ways, which you may consider when thinking of taking up debt-  

Debt Consolidation

This is a move that helps you manage all your debts in a better manner while taking the load of old debts off your mind. In this, you pay off your old debts by transferring them into one new loan. This reduces your stress of managing multiple accounts by giving you more control over your situation.

You should take up a loan when your debts from various creditors have gotten out of hand, and you?re struggling to keep track of them all. Taking a loan will help you pay them all at once and will consolidate your debt liability payment into just one. Moreover, loans have a better interest rate than other debts, so taking this approach makes sense.

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Purchase or maintenance of Your House

Another way to use a personal loan in a meaningful manner is to use it for purchasing a house. You can use the loan money either as a down payment or for meeting other expenses like closing costs. Using loans in making a sound investment such as this is a way to build equity as you make your mortgage payments. Over the years, as you pay off the loan entirely, you have a valuable asset with you. However, do bear in mind that a personal loan affects your debt-to-income ratio, which will impact your ability of getting a mortgage.

Also, if you?re planning to renovate your house, then again taking a personal loan can help you meet the cost without disturbing your steady and stable savings over the years. You can use your savings in achieving other more important life goals.

Starting Your Business

If you?ve been wanting to start your venture, then you?ll know that it is very heavy on the pocket initially. With the need to arrange for permits, inventory, office space, website, equipment and much more, you will need a considerable sum of money.

If you have an alternate source of steady income, then taking a personal loan to start this business will ensure that you can keep finances of this separate. You can pay off the loan using your other regular income, at your own pace without using up your savings all at once. Many young entrepreneurs these days are on a tight budget and thus, a personal loan can be of perfect help to fund the startup.

Purchasing or Repairing your Car

Like a home, a car is going to be a significant investment for you. Being able to go wherever you need to go, when you need to go, makes a lot of difference with your job, business and life.

So if you need a new car to get to work or school, a personal loan can be used to help purchase it. You also may opt for an auto loan, which is secured by the vehicle, or a combination of both. However, there?s a fine line between necessity and luxury. Look for a good deal on the car and be sure the purchase is reasonable for your income level.

Repairing a car is also a good use for a personal loan because, in many cases, you are investing in something that is going to help you get to work and generate income.

Stay secure by using loans smartly

To steer your finances correctly while meeting your various needs, loans can often be of great help to you and your family. All you need is right planning and prudence to make this possible. Otherwise, taking up loans is a simple matter in today?s time and age. Before taking loan, you can use personal loan calculator to know how much EMI you?ll have to pay every month. The personal loan calculator is an excellent way to enlighten you well in advance about how much money you will have to shell out as a part of your monthly payments.

Personal loans offered by Reputable banks like Axis Bank start from Rs.50,000 to Rs.15,00,000 with repayment tenure ranging between 12 to 60 months. Using their personal loan EMI calculator, you can also find out the compound interest and the total money you?ll have to pay.

So, with the right approach, take loans to maximise your happiness. 

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