Getting into debt with a Personal Loan may seem somewhat negative on the surface, but finance exists to give everyday people an advantage. Having debt is generally only negative when you can’t manage it or fail to manage it.
In this article, we’re going to be taking a look at some of the advantages of taking out a Personal Loan and why it can be a good idea.
#1 – Personal Loans Offer Flexibility and Choice
This first point is one of the biggest drawcards about Personal Loans. While other types of finance lock you in for a specific purpose, Personal Loans are a lot more flexible.
While each lender will generally have a list of what the funds can and cannot be used for, when you take out a Personal Loan, you have more options of what you can spend the money on, or even have more than one purpose for the money. For example, you might borrow $20K, spend $15K on your wedding day and reserve the other $5K to help renovate your home.
Personal Loans are often used for weddings, holidays, home improvements and more.
#2 – You Get the Money You Want Now
One of the biggest advantages of Personal Loans is you get the money you need almost right away, rather than having to spend possibly years saving up for something. Let’s say you want to pay for a wedding in Spring. Rather than putting off the wedding until you have all the cash on hand, you can get married now and pay it off later.
Some lenders offer fast Personal Loans and when it comes to fast Personal Loans, Australia has quite a few options. If you take out a Personal Loan with a private lender, you could have the funds in your account as early as the same day you apply or within a few days of application. Banks generally take at least a few weeks from application to approval.
#3 – Manage Your Debt With Debt Consolidation
Sometimes people take out a Personal Loan to consolidate other debts, such as several credit cards. With a Personal Loan for debt consolidation, you can roll other outstanding debts into one manageable debt.
Debt consolidation is designed to help you wrestle control of your debts and finances, potentially reducing monthly repayments and saving money on interest in the process. This is particularly true if you pay off your credit card debts with a Personal Loan at a lower interest rate.
If you feel like credit card debt is getting the better of you, talk to your lender about aPersonal Loan for debt consolidation to improve your financial situation.
#4 – You Don’t Need Collateral
While many lenders offer the option of a secured Personal Loan with interest rates that are slightly lower, the majority of Personal Loans are unsecured loans, meaning you don’t have to offer up anything as collateral to apply for a Personal Loan and be approved. So long as you satisfy the lender’s criteria, you’re in a good position to be approved.
When it comes to Home Loans and Car Loans, the home or car serves as collateral against the loan. Default on the loan and you could potentially lose your home or car.
Unsecured Personal Loans don’t work this way and give you more freedom in that regard.
#5 – Build Your Credit Score
Whether you already have a credit score or no credit history at all, when you take out a Personal Loan and faithfully repay the loan on time every month until the debt is cleared, you’ll boost your credit score, which then makes it easier to obtain finance in the future.
If you plan to buy a home somewhere down the track, it’s a good idea to establish a positive credit history first, so you have a better chance of being approved for that home loan when the time comes.
Even a small Personal Loan will establish a credit record and boost your credit score and you can pay off a smaller loan more quickly.
As you can see, there are some major advantages to taking out a Personal Loan. Just be sure to do your research on lenders to find the best Personal Loan deal to suit your circumstances.