4 Situations That Make Personal Loans a Great Option – What to KnowApril 09, 2020
Whether you’re short on money and need a payday loan, or looking for quick loans online, you’ll find yourself in need of a loan for a variety of reasons. More so, you’ll be looking at personal loans, as these loans are made for specific uses, whether it be cash loans or mortgage loans. Frankly, a personal loan can mean anything depending on its use, as such, you can find a personal loan that’ll be unique to your specific needs.
However, you might be wondering when exactly you should opt for personal loans. Here are four situations where personal loans are a good idea:
1. Improve your credit score
Perhaps one of the most important uses for those with a lousy credit score is that a personal loan can help improve it.
How does a loan help improve a credit score that is affected by the inability to pay off the debt in the first place? It does so in three ways. First, merely having different types of loans can help improve your score. Second, if most of your debt is with credit cards, a personal loan helps mix things up, as we mentioned in the first point. Finally, personal loans are much more enticing compared to payday loans when it comes to borrowing money when you have bad credit.
2. Pay for an expensive purchase
When you’re purchasing something especially valuable, such as a wedding ring, a personal loan is a good idea. However, it’s highly recommended that you opt for cash loans over financing with the seller. That’s because, with cash, you end up paying less due to the reduction in interest compared to financing with the seller or even using a credit card.
If there is one thing you should not do, though, is to finance with the seller immediately. Instead, you should talk with them about financing options and compare them with personal loans. Figure out which ones a better option for you and select it.
3. Simplify your credit card payments
When you have multiple credit cards used and maxed, it might be a challenge to track each of those card’s payments. However, with the use of personal loans, all those payments can be consolidated into one payment. In other words, you’re using that one loan to pay them all off in one go, and your job is only to pay off that personal loan.
The only real risk here is that, since it’s become so much easier to cover your cards, you might end up spending even more.
4. Finance a large event
A significant event such as a wedding is an excellent reason to opt for personal loans to finance it, especially if you know you won’t be able to pay them off as quickly if you use a credit card. A credit card will charge you quite a high-interest rate, and you’ll spend extra on this interest the longer you take.
As such, a personal loan is perfect for this situation because, quite often, it offers a much lower interest rate to begin with, saving you plenty of money in the long run.
Whichever route you go through to grab a loan, always weigh out your options carefully. You don’t want to end up jumping into a financing option on the spot when you could have had a much better option if you had done some research beforehand.
Are you looking to apply for a personal loan in South Africa? Get in touch with us today to see how we can help.