Most of us have been there, in need of a little extra cash in order to fulfil our goal or purpose, whatever the need may be the thought of applying for a loan has probably passed through your mind at one point or another. But, when is it a wise idea, the last thing any of us want is to end up in a worse financial situation than we started off with.
Does it make sense?
Applying for a personal loan makes complete sense if it is less expensive than other types of personal credit and if you are able to easily make the monthly repayments over the period of the loan itself. There are many reasons why you might wish to consider a personal loan, but do make sure you are taking the loan for the right reasons, if you can achieve your goal without the need for a personal loan then you should try to do that first.
Why take a personal loan?
Consolidate debt – if you have existing loans, you might be paying high interest rates or at least higher than what is on offer from the new lender. One way of saving money or reducing the amount of debt you will pay is to take out a loan that amounts to the total amount you owe, but at a lower interest rate, by doing this, you can pay off the other creditors and just repay your debt to one company.
If you are paying high interest rates and consolidation is of interest then you may wish to speak with Universal Finance Australia, they can let you know if consolidation will work in your particular situation. Not only could you reduce your overall debt with a lower interest rate, but it could make your life a lot simpler.
Spread payments – it could be that you just need the ability to spread your payments over an agreed amount of time, for example, if you are able to pay the monthly repayments with ease, then making a purchase and paying it back monthly could be really useful to you instead of paying out one large lump sum at the time of your purchase.
When personal loans do not make sense
Nonessential purchases – personal loans tend to be an expensive method of purchasing if the purpose is not essential.
Medical costs – Most doctors or medical credit cards offer extremely reasonable rates.
Emergency expenses – Personal loans can come with high interest rates; payday alternatives might be a better option if only needed for the short term.