6 Smart Ways to Utilize a Personal Loan | Personal Loan Stories - Kotak Mahindra Bank
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06 AUGUST, 2021

It is rare for anyone to opt for a personal loan without a legitimate and pressing need. These liquidity instruments are typically used to tide over a sudden need for quick cash. So, let us look at six of the smartest ways to utilize a personal loan.

Utilizing a Personal Loan Smartly

We will assume that when you apply for a personal loan, you get it without any hassles. And that you are prompt with EMI payments.

Consolidating debt at a lesser interest rate

You may have one or more small personal loans that you are paying with separate EMIs. Now consider this: a lending institution offers you an online personal loan that is larger than the total outstanding on your existing loans, at a lower interest rate. The EMI for this new loan is lower than the sum of the EMIs of your existing loans as well. In such cases, it makes sense for you to take the loan, pay off the other loans, and consolidate your debt.
Bonus: Such consolidation helps your credit rating to go up, making you an even more attractive prospective customer.


Education here does not refer to your regular engineering or medical courses. Oftentimes, in the course of your job, you may need to upgrade your skill set. There are thousands of such accredited courses, but they may cost more than what you can pay for immediately. An instant personal loan online can come to your rescue here.


You might want to surprise your family with a fancy holiday. A personal loan can come in very handy in such instances. The value of such expenditure cannot be measured just in monetary terms. The experience, the memories, the memorabilia collected during the holiday, all these are to be treasured, their value far more than the expense of paying back the loan.

Home upgrades

Houses tend to need major repairs and upgrades once every decade or so. A personal loan can get you to what you wish in a quick time. However, before doing so, ensure that you list down exactly what you want as part of such refurbishments/upgrades. And then, stick to it. Otherwise, you will not be able to do all that you wanted, and the personal loan will feel like a millstone rather than a handy tool.

Emergency funding

These emergencies could be anything – from dental treatment to medical expenses to wedding expenses. The sudden injection of liquidity into these proceedings might just be the difference that brings on the most favorable outcome for you and your family.

Making up the cost of home purchase

This is a tricky one. When you apply for a home loan, you qualify for 80% of the value of the purchase. The other 20% has to come from your pocket. A personal loan amounting to that 20% could help you. This is especially true if there is more than one earning member in the family, which then distributes the cost of this additional loan.

Final Words

Personal loans are a great way to meet unexpected financial needs. Here, we discussed the six best ways to use a personal loan. You can easily avail of personal loans; just be sure to clear them in time to maintain your credit score.


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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.