What are the main reasons you might consider taking out a personal loan?
Five reasons why you might want a personal loan. Source:?shutterstock.com
Not so long ago, if you wanted a loan, you needed to fill out a stack of paperwork under your bank manager’s watchful eye. Nowadays, an online application is quick and easy, and there are packages available to suit all kinds of circumstances. But what are the main reasons you might consider taking out a personal loan?
Debt Consolidation
Debt consolidation is far and away one of the most popular uses of a personal loan for bad credit. When done correctly, debt consolidation can improve the financial situation of people whose debts are becoming a problem.
The basic idea is to take out a single large loan and pay off all your existing debts. By gaining a lower interest rate, spreading the payments over longer, or both, you can greatly reduce the monthly costs of servicing your debt.
The drawback is that you’ll often end up paying more interest in the long term. Still, for many people, that’s a cost worth paying to ease the stresses of unmanageable debt.
Buying a Car
The drawback is that you’ll often end up paying more interest in the long term. Source: shutterstock.com
If a car is essential for your lifestyle and can’t afford to buy one outright for cash, then an auto loan is one option for financing your purchase. Most dealerships will offer finance facilities, but these are often overpriced and inflexible.
Taking out a personal loan can be an affordable way of getting behind the wheel. Whether you choose a dedicated auto loan or a more general kind of unsecured finance.
Home Improvements
A well-planned home improvement project can greatly improve the quality of your life. However, it can also give a strong boost to your home’s value, and taking out a home improvement loan is a good investment.
However, be sure that the improvements you have in mind will pay back the cost of the loan when you sell your home. For example, while adding a swimming pool to your yard may make your life happier for the next few years, it’s unlikely to add any real value for most buyers.
In contrast, adding extra bedrooms or garage space is nearly always a solid investment.
Paying for a Wedding
A personal loan is an affordable way of funding a wedding. Source: pixabay.com
The average, no-expense-spared wedding now costs around $30,000. While of course, you don’t need to spend anywhere near this much to get married, for many people it’s important to make the day as special as possible.
A personal loan is an affordable way of funding either your own or your child’s wedding, making it truly a day to remember.
Travel and Vacations
Lastly, if you’ve got your eye on a once-in-a-lifetime trip or vacation, then a personal loan can give you the financial breathing space to enjoy without counting the dollars as you travel.
However, think carefully about using credit to pay for a regular annual vacation. If you don’t clear the loan within a year, it’s not an expense that makes financial sense, and the debts can quickly start to build up if you’re not careful.
Whatever you want to use a personal loan for, it’s important to plan carefully and make sure the figures work out, especially if you’re considering securing the loan on your home. However, there are attractive deals available for people with all kinds of credit status, so if the numbers stack up, it’s a great time to borrow.
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