Here is what everyone should know about personal loans and the situations they can be useful in.
Personal loans are one of the many choices you can utilise if you need money. The good thing about such loans is that they can be used for varying purposes, and they can be paid in a short period, opening room for new borrowing opportunities. If you need a large sum of money to undertake a home renovation project, consolidate existing debt or even start a small business venture, a personal loan could be suited for you.
Personal Loan Comparison
The above list gives you an idea of what you could use your personal loan for. Find out a little more about the range of personal loans below and what you could use them form.
In past years, personal loans were generally considered as a way to finance smaller personal purchases such as buying dryers and appliances. However, with new flexible financing options such as credit cards coming up, personal loans have gradually evolved to be used for larger expenditures such as financing weddings or vacations, raising business capital or funding home renovations. If you cannot use your home equity and are more inclined to a personal loan that you can pay off quickly, a personal loan could provide the financing you need.
Projects that can have the most financial impact
Personal loans are quickly becoming the new way to fund home improvements, as they allow you to quickly access finances for a particular renovation project and pay for it within a short period in easy repayments. In the past, most people used to prefer home equity loans for home renovations, but stricter mortgage loan requirements have made these loans harder to access. A personal loan can be great for major home renovations such as upgrading your kitchen or bathroom, improving your deck or putting in new doors and windows without straining financially. You can also consolidate other debt you have while improving your home and get affordable repayments that you can easily pay off before going on to start a new renovation project.
If you are looking for a cost effective way to finance home improvements so as to increase your home value, a renovation loan could help. This is basically a personal loan that gives you the financing you need to improve your home, be it buying new furnishings, replacing your garage door or any other improvement you want.
Topping up your mortgage to get financing for renovations would take longer and increase the cost of the mortgage, so a personal loan can be an easier option to finance home improvements and increase the value of your home. Approval for a personal loan is usually much faster, as there is a lot less documentary evidence required. The personal loan would also be a short term debt, meaning that the costs involved may be lower than those involved in accessing your home equity.
Perfect wedding day
Making your wedding day truly memorable can have a huge toll on your finances. Everything from planning the event, hiring transportation, the venue for the wedding and evening reception to other requirements such as flowers and entertainment can be very expensive. It’s important to find a way to spread that cost with a flexible financing option that is easily accessible.
A personal loan is usually the ideal form of financing for weddings and other big occasions. This is because it will give you quick access to just the amount you need and come with affordable and predictable payments spread out over the span of a few years. A personal loan can give you the funds you need to take care of all the requirements of your dream wedding.
Related: Personal loans to fund your wedding
Finance a car purchase
A car could easily be the second most costly thing you purchase after your house, so finding the funds to finance buying it could be a real challenge. However, with a personal loan, you can find a simple way to get that car you have always wanted. You can shop around for a competitive fixed rate personal car loan from a bank or other finance providers as long as you have a good credit score. You could also use a personal loan to finance the purchase of a caravan, van, boat, etc. and keep costs down due to no ongoing fees and penalties for extra repayments on most personal loans.
A personal loan is usually the cheapest way to finance the purchase of a car, be it used or new, with no restrictions on the make or model you can get. Another advantage of using a personal loan is that it is easy to access funding from lenders on the phone, online or in person. Most lenders will make funds available almost immediately, making the process of buying a car much faster. If you have some savings, you could opt to partially finance your car purchase and save on interest costs, or you could get a personal car loan that will cover the whole cost of the car.
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Take your dream vacation
Going on holiday comes with many costs such as airfares, accommodation, hiring a car and other travel expenses. Financing all such costs out of pocket is not always possible especially if you don't have sufficient savings. A personal loan could be help you take that dream trip by enabling you to get financing with easy and flexible repayments that fit your finances.
Many banks offer travel loans, which are basically personal loans that are specifically tailored to finance travel and accommodation costs for people on holiday so that they can explore new destinations and rejuvenate before getting back to their busy lives. If you have always wanted to see the world but have been held back by the high vacation costs, you could consider taking up an affordable travel loan to help finance your dream vacation without draining all you have saved up. With a little shopping around, you could end up with a great travel loan deal that offers a suitable term and fixed payments that suit your budget.
What shouldn’t you use your personal loan for?
Projects that can potentially negatively affect resale value
Personal loans can also be used for making luxury renovations around the house. With such a loan, you will be able to access large amounts of funds for fairly expensive renovations such as putting in a swimming pool, converting your garage or putting in marble floors in your house. These luxury renovations do little to raise the resale value of your home, but they will definitely give it a classier, unique feel and suit your lifestyle and that of your family.
A personal loan often seems the perfect source of easy funds to help you do whatever you desire. However, you should proceed with caution when applying for one. In most cases, a personal loan should be used for important purposes such as financing renovations, a vacation, or training. Using it to finance things that won’t appreciate and produce more value, could mean that you’re using the personal loan for ‘bad debt’.