Personal loans are ideal when you need extra money to use in consolidating high-interest debt, improving your home or doing events. When they are used wisely, they are capable of ensuring you have sufficient funds for your financial matters, without having to place your property or assets as collateral.
A personal loan is an installment loan that offers fixed money that comes in a lump sum. In most cases, personal loans are unsecured, meaning there is no need for collateral in securing funds. On the other hand, the repayment loan period varies – some lenders allow a duration 30 days, two years, while some can go up to five years. Meanwhile, it’s also a quick and easy process; so, if you’re ever in need of a fast approval loan – you can consider applying for a personal loan considering its flexibility as well.
Read on to find out the ideal situation you can consider using a personal loan.
Consolidating credit cards
If you own several cards that are being charged highly, a personal loan can also serve as a debt consolidation loan, as it can consolidate any charges in a monthly payment. Additionally, the interest rate on your consolidated loan is usually lower, in regards to the annual percentage rates on credit cards. As such, it’ll allow you to pay it off faster.
Financing a purchase
When you use a personal loan to finance a purchase, all that you need to know is whether it is a need or a want. If you proceed to take a personal loan and pay in cash to a seller, it is a great deal as opposed to using a credit card with high interest or financing through the seller. Similarly, it’s a lot more ideal than maxing out your credit card or relying on life-term savings to settle personal purchases; be it for a home renovation or relocation. Hence, use a personal loan to cover any outlying amounts instead.
Fund an event
An event like a wedding may require you to consider applying for a personal loan; especially when you factor in all related charges that you’ll be unable to pay off in a month with your credit card alone. As such, using a personal loan to fund a big event like a wedding helps you saves a considerable amount as long as it is rated lower than a credit card. All that is required on your end is careful budget planning, the appropriate loan amount and payment period selection, and you’re all set on getting a personal loan.
Improving your credit score
With a personal loan, you may potentially improve your credit score as applying for a personal loan may help your “credit mix”. Especially if you’re both in need of extra cash and possess a history of missed repayments, getting a personal loan and repaying it in time can boost your credit score.
This is due to the reason being that you’re responsible, have the ability to manage different types of loans at a time, and repay them altogether. Also, it can lower credit utilisation ratio. If you use a lesser amount of the total credit card, you score better. A personal loan, therefore, increases your available total amount. Also, when the loan is paid on time, your credit score improves.
These are just a few out of the many different situations where you can consider getting a personal loan to meet your financial needs. With a personal loan’s fixed interest rates, you’re able to pay off the loan comfortably with ease no matter the financial matter you’ll need the loan for.