Life often throws unexpected financial challenges, leaving you scrambling for funds. Whether it’s an emergency expense or an unplanned opportunity, having access to different funding options can provide much-needed relief. A personal loan is a go-to solution for many, but exploring additional options, such as instant loans and credit cards, can also be beneficial. Let’s delve into how you can combine these methods to meet financial demands efficiently. Discover the best personal loan interest rates in 2024! Compare top lenders and secure low-interest loans for your financial goals.
Scenario: Raising ₹7.5 Lakh in an Emergency
Imagine a situation where you suddenly need ₹7.5 lakh. While a personal loan is the most straightforward solution, diversifying your borrowing sources might make better financial sense. Here’s how you can manage it:
- Personal Loan: Secure ₹3 lakh through a personal loan, providing you with a significant chunk of the required funds.
- Instant Loan: Borrow ₹2 lakh through a pre-approved instant loan from your bank.
- Credit Card: Use your credit card to make vendor payments or cover the remaining ₹2.5 lakh.
This diversified approach meets your financial needs and helps you manage debt better, potentially boosting your credit score.
Benefits of Diversified Funding
Combining multiple financial options can offer distinct advantages:
- Smaller Loan Amounts Are Easier to Manage
Breaking down the total into smaller chunks across various channels can be easier than a single, large loan.
- Lower Interest Burden
Personal loans generally have high interest rates. Combining funding methods can help reduce the overall interest burden.
- Improved Credit Utilisation Ratio (CUR)
When you make payments using a credit card, you utilize part of your credit limit. As long as your CUR remains below the ideal 30% ratio, it positively impacts your credit score.
- Pre-Approved Loan Convenience
Banks often offer pre-approved instant loans through net banking or mobile apps. Leveraging these options can simplify the process and avoid additional application procedures.
Proceed with Caution
While diversifying your borrowing sources has advantages, it’s essential to exercise caution. Multiple loan applications may lead to numerous hard inquiries on your credit report, negatively affecting your credit score.
Tips for Safely Combining Options:
- Opt for Pre-Approved Loans: Pre-approved options like instant loans or credit card advances minimize the need for new applications.
- Monitor Credit Utilisation: Avoid exceeding the ideal CUR of 30% to maintain a healthy credit score.
Advantages of Choosing a Single Personal Loan
If juggling multiple loans feels overwhelming, opting for one personal loan can be a more straightforward solution. Here’s why:
- Single Hard Inquiry
A personal loan involves only one hard inquiry on your credit report, limiting any negative impact on your credit score.
- Structured Repayment
Managing repayments becomes straightforward and predictable with fixed EMIs and a predefined tenure.
- Low Credit Card Utilisation
By refraining from using credit cards for significant expenses, you maintain a low CUR, leaving your credit card available for emergencies.
- Credit Score Impact
Personal loans reflect marginally positively on your credit score, signaling responsible borrowing behavior.
Key Takeaways
When faced with financial emergencies, diversifying your funding sources—such as combining personal loans, credit cards, and instant loans—can be a smart strategy. However, if simplicity and structured repayment are your priorities, a single personal loan might be the better choice.
Regardless of your approach, always ensure that your borrowing aligns with your financial plan and avoid overextending your obligations. Responsible borrowing is the cornerstone of economic stability. Personal loans made easy! Compare interest rates, eligibility, and repayment options to find the best personal loan in India.