Fullerton India Credit Co. Ltd. is Now SMFG India Credit Co. Ltd.

8 Smart & Right Ways to Use a Personal Loan

Published on Feb 24, 2021Updated on Jan 24, 2024

8 Smart & Right Ways to Use a Personal Loan

As lifestyles are improving, people have higher disposable income, abundant choices available and to top it all attractive personal loans. The best part about personal loans is that they can be used for any purpose. Some of the uses of a personal loan include going for a holiday, renovating one’s house, starting a business, paying fees or even for medical emergencies. Thus you don’t have to dip into your savings. If you have been wondering how to use a personal loan, please continue reading.  

Here are the 8 best ways to use a personal loan:

1) Debt Consolidation

Debt consolidation is certainly one of the wisest moves towards building a healthy financial future. Carrying multiple loans and outstanding credit card bills is unfortunately a perfect recipe for financial trouble. This is where personal loans can come in and salvage your debt laden situation. The biggest benefit is lower personal loan interest rates. Your outstanding debts together can get consolidated into a single monthly payment. A Personal loan will offer a way wherein you can only make a single payment in a month, thus making your finances more manageable. Based on your personal loan eligibility you can also go for an amount more than the sum of the remaining amounts in your existing loans which you are trying to consolidate. You can use our personal loan balance transfer calculator to know more.

2) Emergency Funds

Nobody welcomes emergency expenses. They always land in our lives at the wrong time and are usually due to something unpleasant. But the requirement to pay them is unavoidable. Emergency expenses are many times medical treatments requiring hospitalization, emergency home renovation due to unforeseen circumstances like a terrible rainy season, unexpected wedding expenses, etc. Payment of such expenses needs us to dip into savings and investments. Instead, you can consider a personal loan that offers low interest rates.

3) Home Construction

Buying a house is certainly one of the most expensive purchases of our lives. If you can find a trusted builder and use your creativity, you can try something different. You can invest in a piece of land and construct your own house with a garden and fulfill a big dream. Alternatively, you can also purchase a ready made home. While a home loan can help you over 80% of the overall cost of the home, you can go for a Personal loan if you need additional funds for the remaining 20% or for home construction if you choose to build a home over your plot of land.

Must Read: 8 Smart Ways to Manage Your Loans in a Better Way

4) For Improving your Credit Score

Having a healthy credit score and history is highly important when you are looking to borrow money. Credit score is determined by credit bureaus based on how individuals as well as entities manage      borrowed money. Borrowers who have a huge credit usage or borrowers who have not repaid their past loans on time are considered to be at a higher risk. Thus, consolidating your debts, maintaining a healthy debt to income ratio, paying your loan on time, and so on are some of the ways in which you can improve your credit score. Remember to pay your loan installments in time until the end of the loan tenure, because delayed or missed payments can hurt your credit score. Thus later in the future if you wish to take a bigger loan such as a housing loan, a healthy credit score would be extremely useful.

5) Home Upgradation

Upgrading our home with modern fittings, latest appliances and redesigning for better usage of space is the most common use of personal loans. You may want to make it more functional for yourself or you may want to increase its resale value in case you want to sell at a point in future. One of the most efficient ways is to take a personal loan for home improvement or house maintenance.

6) For Travel Arrangements

Personal loan for travel is simply a personal loan intended for travel purposes. It can cover all the costs that are associated with your holiday, like flight fares, accommodation, tours, travel insurance, etc. So if you are planning a journey, but do not have the funds for it, then your plan may not be at distance. With a personal loan for travel arrangement, you can easily get the funds you need to organise your travel and other arrangements for your dream holiday.

Must Read: 5 Simple Ways to Choose the Right Personal Loan Tenure

7) For Education

Taking a Personal loan for education is one of the most common uses of personal loans these days. Many times, students may want to pursue higher studies for certain courses which may not be eligible for an education loan, or may need funds more than what they can get through an education loan. Thus, parents can apply for personal loans in such cases to help their children pursue higher studies. These loans are also availed by salaried professionals to apply for short term professional courses, special certification, higher education, etc. It can even take care of school fees for kids.

8) For Business Owners

Personal loans offer many benefits to business owners. Personal loans are versatile and as a business owner, they do not bind you with rules on funds utilisation. Sometimes your business may need multiple expenses, or urgent cash based expenses. At such times personal loans can be made available in a very short time. Another advantage is that personal loan interest rates are marginally lower compared to a business loan. Personal loans can also be used by self employed professionals for any business or personal need.


These are some ways you can certainly use personal loans innovatively and smartly. Achieving these goals will require robust financial discipline. Unlike taking a personal loan for shopping or holidaying, these ways will allow you to move to upgrade your lifestyle and live more efficiently.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

Was this helpful?

Yesyes vote
Nono vote
Sorry about that
How can we improve it: