Personal Loan can be a viable option in a variety of circumstances. First, let define a personal loan. Some loans are earmarked for a specific purchase. You buy a home with a mortgage loan; you purchase a car with an auto loan and you pay for college with a student loan.
But a personal loan can be used for just about anything. You can do what you want to do with it.
Getting a Personal Loan is not a bad idea at all! The main advantages of getting a personal loan include the following.
- Relatively fast
- No restriction on how you can spend money
- Don’t require any collateral
So, if you don’t have any assets like a home, or shares or gold to offer as security, and are in need of money urgently, this is perhaps the most convenient option. No doubt personal loans are very successful you can take it out for almost anything. But its good practice to review your situation before entering into a financial agreement.
So, take a moment to read through the following checklist and ensure your personal loan makes sense and you really need it.
1) Do you have a real reason to get a personal loan?
Getting a small personal loan should never be thought of as a trivial or minor undertaking. While you can secure a loan for almost anything, it’s important to remember that the consequences for defaulting could be dire and life-changing.
2)What should you get a loan for?
When it comes to small personal loans, there is a range of sensible reasons why people choose to take them out. Using a loan to consolidate your credit card into one monthly payment is an attractive idea if taken out at the right time. This is because the interest rate you might get on your small personal loan could be far lower than your credit cards.
3) What shouldn’t you get a loan for?
Getting a personal loan in some cases, in others, you simply shouldn’t. Paying off a student loan is one of those cases where you shouldn’t. A student loan will normally come with a tax advantage and it’s possible that the government could offer a loan forgiveness program in the future. If you switched to a personal loan, then you aren’t eligible for either of these things.
4)Are you overlooking any important factors?
Getting a personal loan should never be a case of walking into your bank and signing on the dotted line. You’ve got to shop around and find yourself the best terms out there from the most reputable lender available. When taking out a loan, never accept anything other than a fixed interest rate loan as variable rate loans can turn out to be an expensive risk to take.
It’s vital that you examine your reasons for wanting a personal loan and work out if it’s really necessary. If you are certain about those reasons then you are good to go with a personal loan.
