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Angela Redmann

When is a personal loan a good idea?

April 12, 2023 by Angela Redmann

These days we have lots of ways to pay for purchases. But don’t overlook personal loans.  They can tick plenty of boxes especially for big ticket buys.

Ready for your next big travel adventure? Thinking of some renovations? Or maybe you’re planning a dream wedding. If that sounds like you, chances are you’re thinking about ways to pay for it all.

A personal loan can be a handy option. It can help you manage the cost, budget for repayments and have a clear date when the slate is cleared.

Let’s answer 7 FAQs to help you decide if a personal loan is a good idea for you.

1. What is a personal loan?

A personal loan is a type of loan that provides access to smaller sums.  Anything from a couple of thousand dollars up to around $50,000 depending on the lender.

Just like a home loan, a personal loan can come with a fixed or variable interest rate, and you can usually choose to make repayments weekly, fortnightly or monthly, whichever matches your pay day.

As a bonus, you can pick the term of a personal loan to suit your budget, though the loan will usually need to be repaid within 1-7 years.

2. What types of personal loans are there?

Personal loans come in two main flavours, secured and unsecured. A car loan for instance, is a type of personal loan secured by the car you buy. By providing security, you’ll often save with a lower interest rate.

Plenty of personal loans are unsecured. So you don’t need to stump up security. This gives you the freedom to spend the money on things like a vacation, special occasion or home improvements.

3. What can I use a personal loan for?

Plenty! The beauty of personal loans is that you can use them to fund just about any worthwhile project. This can include:

  • home improvements like pools, spas, landscaping, bathrooms and kitchens
  • household furnishings
  • holidays
  • a new car, boat, caravan or horse float
  • car repairs
  • your dream wedding
  • your children’s education
  • medical or dental expenses
  • legal fees.

 4. Can I use a personal loan for debt consolidation?

Yes! You can even use a personal loan to streamline your finances. Folding multiple debts like, say, a credit card, store card and buy now/pay later balances, into a single personal loan means you only have to make one monthly repayment. You could also save on interest costs. 

5. How much can I borrow with a personal loan?

Exactly how much you will be able to borrow depends on a variety of factors including your income and the value of any other debts you have.

Lenders each have their own rules around how much you can borrow. So, the best way to know for sure is to give me a call.

6. Is a personal loan better than a credit card?

A personal loan can certainly have a number of advantages over a credit card:

  • The potential to save with a lower interest rate – personal loans can come with much lower rates than many credit cards.
  • A clear limit on how much you borrow – a personal loan gives you a fixed amount to spend so it’s easier to stick to a budget and avoid hard-to-manage debt.
  • A set end date – with a personal loan you’ll know exactly when the loan will be fully paid off. That’s quite different from a credit card, where you can keep drawing on your credit limit indefinitely.

7. How do I apply for a personal loan?

Like any loan, the lender will want to see you can comfortably manage the repayments. So you’ll need proof of income and employment plus details of any other debts you have. I’ll help with the paperwork, which makes the application process easy.

Knowing when a personal loan is the right choice

A personal loan can have real upsides, but expert advice is a must-have to know if a personal is the right choice for you.

Give me a call today to get started. I can explain how much you can borrow, your likely repayments and provide plenty of tips on how to pay off the loan faster if you decide a personal loan is the right match for your needs.

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