The most common types of financing that you’ve probably heard of or even had experience with are credit cards, car loans, student loans and mortgages. However, most people are unfamiliar with the term personal loans, but this is possibly the best solution if you’re facing a difficult or urgent situation that requires substantial cash, such as a job opportunity in another country, unexpected car repair, a wedding bash or moving house.
These are the situations when you need to come up with the money fast and a personal loan is just the right choice.
What is a personal loan?
A personal loan is money you can borrow from a credit union, a bank or an online lender to be repaid with interest over a determined period of time. The interest rates on personal loans differ depending on the applicant, and the credit.
Whereas credit cards use revolving credit, personal loans are instalment loans, similar to car loans and mortgages. Also, they are commonly unsecured which means there’s no need to provide any collateral against the loan. Hence, the average interest rates are lower than credit card interest rates but slightly higher than with secured loans like mortgages and car loans.
If there’s a sudden emergency, like paying for a family member’s funeral, getting a Noddle personal loan might be a cost-effective option. Another situation to take out a personal loan is unexpected medical bills particularly when it’s expected to be paid immediately in full. Since these loans can be disbursed quickly, they are a suitable way to cover various emergency or unexpected expenses as you can negotiate tailored loan rates according to your individual circumstances.
Debt consolidation is another very common reason for taking out a personal loan. When used for the purposes of paying off multiple other loans and debts, all of those outstanding balances are combined into one monthly instalment. This makes it easier to determine a time frame to pay off your balances without getting overburdened.
When you’re looking to pay off your credit card debt, a personal loan offers the advantage of lower interest rates as well as a reduced amount of time to pay off the debts.
On average, moving house locally costs a bit over $1,000, whereas a long-distance move will add up to several thousands. If you can’t provide that cash on hand, a personal loan can be a great solution to pay for moving expenses.
Personal loan funds can help cover all aspects of moving – the transport of your household belongings, your vehicle across the country, purchase of new furniture, and any additional costs. Taking out a personal loan for moving expenses can help you remain financially stable if you’re moving somewhere but still have no job.
Personal loans are often used by homeowners to remodel and upgrade their home, complete necessary repairs, like fixing the roof, plumbing, heating or redoing the electrical wiring.
A personal loan is an ideal solution if you don’t have equity in your home or you want to avoid getting a home equity line of credit or home equity loan. In contrast to home equity products, personal loans, despite being unsecured, typically don’t entail you to put up your home as collateral. Therefore, this is a great option if you’re looking to fund a small to mid-sized home renovation project but you don’t want to borrow a secured loan.
The average cost of a wedding in Australia in 2021 was around $50,000. For couples who simply can’t afford to pay for this themselves, a personal loan can help them cover the expenses presently and repay the debt later after the event is over and they can summarize their impressions and draw the line on costs.
A personal loan can be used to cover those big-tag items such as the venue and bride’s as well as the bridesmaids’ dresses, and smaller expenses like flower decorations, photographer’s services, the cake and a wedding planner. If you don’t want to exhaust your savings, consider taking out a personal loan to make sure your wedding day goes exactly the way you have always dreamed it would.
Another advantage of a personal loan is that it can help you find all of the wedding expenses upfront, which means you will be able to avoid spending your savings and additional stress.
Whatever your circumstances may be, don’t forget that your personal loan must be paid off eventually. The moment you take out a personal loan to pay off your debts, medical bills, home renovation or to throw the perfect wedding bash, you are borrowing money that will have to be repaid with interest. The bottom line is that personal loans are an excellent way to consolidate your debts and improve certain aspects of your life, but you should always make sure you approach this matter responsibly.