July 17, 2019
Life changes quickly and can be expensive – costing you money that you may not have right now. That’s when a personal loan can come in handy!
You might be ready for your next big adventure, desperate for a renovation or wanting to fund your dream wedding. There are lots of reasons you might need to borrow money and for smaller amounts a personal loan could be ideal.
What is a personal loan?
A personal loan is another type of loan designed to give you access to smaller amounts of cash. Just like a home loan, a personal loan can have a fixed or variable interest rate and requires regular weekly, fortnightly or monthly repayments.
Unlike a home loan though, a personal loan can be unsecured meaning you don’t have to borrow against an asset such as a property. On top of that, a personal loan is required to be repaid over a much shorter period of time, usually between one and seven years.
You can use your personal loan to fund:
- home improvements like pools, spas, landscaping, bathrooms and kitchens
- household furnishings
- holidays
- the purchase of a car, boat or caravan
- car repairs
- your dream wedding
- your family’s education
- medical or dental expenses
- legal fees
You can also use a personal loan to take control of your finances by:
- consolidating them all into one easy repayment
- funding a purchase outright to save on interest in the long run
How much can I borrow?
Personal loans are designed to give you access to smaller amounts of cash over a shorter period of time. Usually you will be able to access between $4,000 and $50,000 through a personal loan with lenders requiring the loan to be paid off within seven years.
Different amounts and loan terms are available, but at the lenders discretion and will require some kind of asset to secure the loan.
Why a personal loan and not a credit card?
With interest rates for personal loans sitting at historical lows, getting a personal loan could be a cheaper option than paying the interest on a credit card debt. Both personal loans and credit cards incur interest payments and fees, so its important to check what you’re paying on both.
Credit cards give you access to smaller amounts over a longer period of time but without careful use, they can be dangerous. Personal loans are paid in a lump sum upfront, giving you some control over the debt and ensure that you’re working towards paying it off.
What do I have to do when applying for a personal loan?
Like any loan, you’ll have to show the lender that you have the ability and capacity to repay the debt in the required time.
This will require an assessment of your overall financial health and proof of your incoming and living expenses such as rent, car payments and more. You’ll also need to show evidence of your credit history, your employment details and how long you’ve been in your current job. These all factor in to whether the lender will approve the loan.
When a Personal Loan is the right choice
It’s important to keep your overall financial health in mind when looking at a personal loan. While it’s a fantastic option for smaller purchases, it’s also important to make sure that you’re not harming your long term financial health with additional loans on top of the debts you already have.
Rather than a quick fix to cash flow issues, personal loans should be considered carefully & paid off quickly.
Talk to Mortgage Choice in Geelong about your personal loan
The best way to know for sure if a personal loan is the right choice for you is to speak to your local Mortgage Choice broker in Geelong & Bellarine.
We’ll sit down with you and discuss your goals, your budget & find the right personal loan for you. We’ll even give you some tips on how to pay off the loan faster.
Call Michael and the team today on 0447 528 116 or click on the Contact Us button at the top of the page.
