Some people apply for personal loans for their immediate needs. While this may sound like the most practical solution to such a financial situation, some people still consider the loan as an added burden. Besides, who would want to take out a certain percentage of their monthly income to pay debts?
However, financial experts claim that a personal loan isn’t bad. If you use it responsibly, it can work to your advantage. Some of the benefits of getting a personal loan include reduced stress in your life and significant savings.
Personal Loan Basics
A personal loan is an unsecured debt, meaning there’s no need for you to show collateral to get the money you need. Oftentimes, you just have to provide practical reasons to the lenders.
For instance, you can say that the loan will be used to pay for professional training or for urgent expenses.
As long as your reasons are not just to satisfy your cravings for costly gadgets, shoes or clothes, or other non-urgent costs, a personal loan is the most practical solution.
4 Ways a Personal Loan Can Be Used to Your Advantage
1.As capital for a potential source of income
Have you ever dreamed of starting a small business? Would you like to buy tools to start a potential means of generating more income? If your answer is yes, then applying for a personal loan to get the money you need is a smart move.
In fact, finance experts encourage people to take out a loan without hesitation if you can make money from it.
Though there is a type of loan designed specifically for business purposes, you will have to establish at least two years of making money from it before the lending institutions can grant you a business loan. Moreover, you have to submit several documents, including proof that your business is gaining income and a business registration.
With that said, it’s impossible for you to get a business loan if you don’t have these requirements.
With a personal loan, you can get the cash you need easily so you can start your business immediately. By borrowing funds for your start-up business, you will be making minimal monthly payments.
2.As payment for your current credit card debts
A hefty amount of debt on your credit cards can add stress to your life. Remember that the unpaid balance on your credit card bills can have a high interest rate. And if you have several credit cards with debts, then you will incur massive fees each month.
By taking out an adequate amount of money through a personal loan, you don’t have to worry about these high interest rates. Know that interest rates on personal loans are usually less than 15 percent. If you further do your research, you can even get a loan with 6 percent interest.
Eventually, you can get significant savings and things will get a lot easier. You will soon become debt-free with a single personal loan to pay and with low monthly payments.
3. To cover for training and tuition fees
In today’s fluctuation economy, you must be well-equipped in your career. You will gain a higher chance of being promoted if you possess more credentials. And this means a higher salary!
So if you want to undergo workshops or skills courses, getting a personal loan proves to be useful. Instead of withdrawing your bank savings to pursue a training course, you just have to get a loan to pay for the fees involved. Doing so allows you to make smaller monthly payments for the loan. Moreover, the salary rise that awaits you once you complete the course will make the loan worth it.
4. For quick home repairs and improvements
If your property is experiencing maintenance issues like a leaking roof or a broken furnace, you will often need a significant amount of money to have home repairs done. Taking out a personal loan to cover these repairs before they become worse can be the easiest and most affordable option for you.
Furthermore, if you are considering buying appliances or large furniture to improve your home’s efficiency, using a personal loan can be a better option than using your credit card. As mentioned earlier, the interest rate for personal loans is lower than that of credit cards.
When your finances are a bit tight, getting a personal loan to obtain extra funds is, without a doubt, your best option. But make sure to use it to further increase your income, be it working capital for your start-up business, payment for your high credit card bills, funds for paying school fees or a means to hire professionals for quick home repairs. Bear in mind that when used properly and responsibly, a personal loan can give your finances a positive boost.