3 Key Reasons To Take Out A Personal Loan
Thinking about taking out a personal loan? Did you know that a personal loan can be more cost effective than putting expenses on your credit card? This is because you pay less interest. Find out how a personal loan can help you reach your goal faster, and how to choose between loan options.
Personal loans can be a great way to give you an extra cash boost for a special time in your life. While saving up is obviously an important way to prepare for big events and occasions, sometimes you may need access to money faster than you can save. This is especially true if you're planning a wedding, travelling overseas for something special, or you need to pay for an unexpected event like a funeral. A personal loan can help you cover the upfront costs of these life milestones and allow you to pay them off in instalments later.
Large Scale Purchases
Whether it's something you need to spend money on, or an indulgence you can't help but be tempted by, we have all made a larger purchase at some point. It could be that your car has broken down and you need to buy a new one. Or maybe you really want that new fancy computer to start your new job, or a special piece of furniture as you're moving into a new home. Whatever the reason, large scale purchases can take a big chunk out of your savings. Instead, you can take out a personal loan and pay them off gradually. This is especially helpful when big purchases are unexpected and you don't have time to save up.
Possibly the best reason to take out a personal loan is to consolidate your existing debts into one, easy to manage loan. When you take your debt from credit cards and elsewhere and consolidate it into a single loan, you only need to worry about one set of repayments. You also may have more flexibility to achieve a better interest rate. This can help you to pay off your debts faster and pay less interest in the long term, saving you money!
How To Choose A Personal Loan
So you've decided that a personal loan is the right choice for you, now what? It's important to compare personal loan options and make sure you are picking a provider and a loan that is
going to work for you. Some of the features to focus on when comparing personal loans include:
- Interest rate: This could be fixed or variable. A fixed rate means you know how much you are paying each month, while a variable interest rate means that your repayments will change.
- Fees: There are different types of fees that can be associated with personal loans, including an application fee, service fees, and missed payment fees. Sometimes there will be a fee for ending your loan before the specified date or making extra repayments.
- Terms: The term, or timeframe, of the loan determines how long you have to repay it. Loans with shorter terms often have lower interest rates. Loans with a longer term may have lower payments, but you will end up paying more interest.