In recent times the availability of Personal Loan through all leading Banks and Non-Banking Financial Companies (NBFCs) have given you a scope to have additional money in your hands. A personal loan is an unsecured loan, and the borrowed fund may be used to meet any financial goal you may have in life.
However, it would help if you kept in mind that Personal Loan interest rates are generally much higher than secured loans. Generally speaking, the interest rate on a Personal Loan falls between 12 percent p.a. to 28 percent per annum. To ascertain the quantum of your monthly liability arising out of the Personal Loan, you may use the online Personal Loan EMI calculator embedded on official websites of all financial institutions offering Personal Loans.
Personal loans have gained immense popularity amongst the younger generation. Many of them prefer to avail of Personal Loans and invest the borrowed amount in the stock market to maximize their opportunity to gain in the short term. You can find options for easy loans here.
Why An Investor May Consider Using Funds Out of Personal Loans For Investments?
The practice of using borrowed funds for investments in securities like stocks, shares, and mutual funds is known as leveraging. Some of the reasons as to why a person may opt for leveraging are as under:
1. No Restrictions On Use of Funds:
The beauty of Personal Loans is that the fund borrowed is not tagged to any specific use. Hence, the funds may be utilized for any legitimate expenses. Investing the funds to earn interest is, therefore, a plausible option.
2. No Collaterals Required:
For availing of Personal Loans, nothing is required as security. Therefore, the fear of the loss of an asset does not exist. Also, Personal Loan processing is easy and fast. The ease of getting funds out of Personal Loans provides you with the desired funds with the shortest turnaround time.
Is It Advisable To Take Personal Loan For Investments In 2022?
The idea of investing out of borrowed funds may seem to be an exciting option. But, before you get down to the act, you need to be sure that the investment decisions that you are taking will surely fetch profit.
The last two years of the pandemic have taught us many tough lessons. There has been economic instability worldwide and in almost every sphere of our lives. With 2022 just around the corner and a semblance of normalcy restored, there will always be a temptation to invest and grow financially. Hence, it would help if you were doubly careful before investing your borrowed funds without a guaranteed return. Thus, leveraging may be a good idea only when:
- You are absolutely sure of the returns that your investment will fetch.
- You need to ensure that returns on your investments are higher than the interest you are paying to repay the loan.
- Suppose you are investing in a tool that gives you a guaranteed return. In which case, you do not run the risk of getting your capital wiped away.
- When the returns will come in before the Personal Loan tenor gets over.
- When you have the financial backup to support you in case the returns are not as profitable as expected.
To sum up, it may be stated that the world economy is still coming to terms with the new era. We are not aware of what is in store for us in 2022. Markets may look up, continue the way it is now, or even go down. In short, it will not be advisable for you to avail of Personal Loans for investment. If the returns are not in the proportion as forecasted, you will lose your capital and be straddled with an additional burden of interest. Instead, you should borrow funds to build assets like house property or land, where the price will undoubtedly appreciate over time.