by Ed Seycota

Some people consider personal loans frivolous. It is one thing to get a mortgage for a house or an auto loan for a new car. It is a different problem to enter debt only to enjoy an exotic vacation for a week. However, personal loans have become a critical financial tool for people coming from all walks of life. If you strategize correctly on a personal loan, it can make your life easier.  No Sword of Debt over your head! So, let’s learn more today about personal loans and how to use them to your advantage.

When Do You Need a Personal Loan?

Personal loans are unsecured loans. They need no collateral like assets, cars, your home, and so on. They do not come earmarked for a precise type of purchase (like mortgage, auto loans, or student loans). Many lenders and banks don’t even want to know what you intend to do with the money. As long as you qualify for the particular loan and abide the law, you are alright.

Personal loans are useful when you need large sums of money for significant expenditures:

  • home improvement/remodeling projects,
  • extended medical bills,
  • a wedding or (worse) a funeral,
  • an expensive trip,
  • moving to another city,
  • the emergency purchase/replacement of major household appliances and electronics,
  • or the acquisition of a vehicle.

Personal Loan vs. Payday Loan

When you need money for an unforeseen and rather significant expense, you may have to choose between the two. Each comes with advantages and downsides. We will discuss them so you can make an informed choice.

A personal loan differs from a payday loan in many ways. Both are easy and unsecured financial tools you can use depending on the situation.

  • A payday loan means access to quick money you can use to solve a crisis.
  • When it comes to a payday loan, you can borrow money online that you typically must pay back at your next salary in 3-4 installments, depending on your agreement with the lender. The sooner you give them back, the lower your interest rates.
  • Some banks and credit unions allow you to apply online for a personal loan as well, but you still need to go through the motions with a lender’s representative.
  • The available sums are lower than those accessible through personal loans, with higher fees.

In comparison with payday loans, personal loans take longer for approval. In other words, if your car or fridge broke and you need to fix things in an instant, a payday loan is your go-to solution.

Here are some examples that warrant a payday loan rather than a personal one:

  • funeral expenses,
  • home accidents,
  • urgent medical bills,
  • severe household appliances/electronics’ malfunctions.

You could use your credit card for such expenses. If you have a poor credit history, your credit card company may not help you as you expect.

  • Personal loans can become strategic for your financial future, and this is the topic we will focus on next.

Personal Loans as Critical Tools for Your Financial Stability

Besides allowing you to make a wide variety of purchases for needs or leisure, personal loans can also build the foundation of a more secure financial life when managed correctly. Here is how!

Debt Consolidation

The carrying of multiple loans/credit card debts is the recipe for financial disaster. The surefire way to achieve financial balance is to apply for a personal loan. It helps consolidate all those debts into a single monthly payment at a reasonable interest rate.

The mechanism is simple. You borrow the amount of money you owe on your credit cards and other loans. If your lender approves the sum, you can start paying your debts from the loan fund. The interest of the personal loan is lower than what you need to spend on other loans and credit cards. It means you can save big money. Use it to pay your debts in a clear, timely, and straightforward manner.

Similarly, you can use a personal loan to refinance an older loan with a higher interest rate. With personal loans you can get out of pressing debt, as counterintuitive as it may seem.

Improving Your Credit Score

Again, getting into debt to improve your credit score sounds a bit paradoxical until you stop and do the math. Consider this as an investment. You don’t need a personal loan; you just take one to secure your financial future. Here is how investing in a small personal loan can boost your credit score and bring you advantages:

  • It helps with your “account mix.” If you only have credit cards, a personal loan might improve on your credit portfolio. Having multiple types of loans is favorable to your score. It matters when you want an extensive home mortgage loan or a bigger personal loan in the future.
  • Let’s say you take an average personal loan for two years. Apply this case study to your situation: put the money in a separate account, so you don’t touch it. Pay only the interest on this loan on time for two years. Check your (now higher) credit score after that period. You will see banks trusting you more with bigger lends, better credit cards, and more available financing tools.
  • Having a personal loan that you pay on time improves your credit score. It increases your total amount of credit you have available to use.

If you take a personal loan as an investment in better credit scores, make sure you pay it on time.

Boosting Your Property’s Curb Appeal

As we said at the beginning, many people take personal loans for home improvement projects. House remodeling is necessary to improve your comfort and living conditions. Many access such loans as a form of investment when they want better property curb appeals.

The mechanism is simple: you take the loan, invest in infrastructure, design, landscape, appliances, etc. with the sole purpose of seeing a fast and significant ROI in the form of rent or selling. Monthly high rents or a high selling price for the house can cover your monthly loan payments. They can generate quite a profit.

Take money to make money is not a new thing. Especially in the real estate industry. Most homeowners consider personal loans as the stepping-stone for increasing their property’s curb appeal.

Did you consider a personal loan as a financial tool, critical for a secure lifestyle? Did you take one as an investment, not because you needed to buy something?

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments
You May Also Like

巴士在波斯陶路交界处起火

一辆巴士今早在波斯陶路(Portsdown Road)和纬壹通路(one-north Gateway)交界处突然起火,民防部队于早上约9时15分接到通报,立即前往现场灭火。 据亚洲新闻台报导,民防部队抵达现场后,以水柱扑灭火势,至于医护人员则在现场检查一人伤势。不过有目击者表示,所幸巴士上未有乘客。 至于起火原因,当局仍在调查。根据网民在社交媒体reddit分享的图片,可见火势骇人,巴士车顶几乎被烧成废铁。

明起电动滑板车不准在人行道使用!

明日起电动滑板车被禁止在所有人行道使用! 相信是基于涉及电动滑板车的事故频繁,交通部兼卫生部高级政务部长蓝彬明医生,今日在国会作出如是宣布。 他指出尽管过去两年当局已积极推广个人代步工具的安全使用,惟仍有鲁莽使用者,涉及电动滑板车的事故仍持续攀升,包括在今年9月21日发生的电电动滑板车与脚车相撞事故,导致一名65岁妇女丧命。 迄今为止,和当局注册的电动滑板车约有10万辆。蓝彬明在回应议员提问时透露,每个月平均有370名违例者,甚至还发生严重或致命事故。 不过陆路交通管理局将给予两个月宽限期,先给那些违例在人行道使用电动滑板车的民众发出警告;从明年1月1日起,违例者一旦罪成,可被罚款最多2000元或坐牢三个月,或两者兼施。 不过,脚车和电动轮椅等代步工具(Personal Mobility Aids),仍可在人行道、脚车道和公园连道使用。 此外,蓝彬明也表示目前也不会对共享电动滑板车服务发出执照。 此前,交通部高级政务部长普杰立医生在接受CNA938采访时,曾表示个人代步工具是很有用的交通工具,政府没打算因为少数不负责任的骑士,而直接打击。 随着个人代步工具普及化,相关设备的意外事故也随着增加。 陈笃生医院在上月21日公布一项数据,比起2017年,今年有高达68巴仙的个人代步工具相关意外发生。在2017年1月至2019年9月,院内共接获213个人代步工具相关意外被送入院治疗,其中有6宗是死亡案例。另外,院内也接获6宗遭个人代步工具而受伤的通报。…

Netizens criticise MP Carrie Tan’s characterization of social workers with degrees having less “natural empathy”

Ahead of Monday’s (13 Sept) Parliamentary sitting, MP for Nee Soon GRC…

Another potential problem with the GRC

Andy Loh/ Much has been said about how the GRC system has…