You might need a personal loan to help support your finances, but when is actually the best time for you to get it? There are situations and reasons how taking up a personal loan can be a good idea and worth it. This article explains 4 instances when a personal loan can make sense to you, read more to find out.
Let’s be honest - personal loans get a bad reputation. There’s a stigma behind it, and it’s not exactly something that you’d want to tell your date on your first dinner together.
But we do have to face the fact that we live in a world where almost everything comes at a price. And sometimes, what we need is something that we cannot afford.
In times like this, we can look to financing help through the use of personal loans. If you’re not sure how it works, it’s basically having a bank or company lend you a sum of money. It obviously comes with an interest rate, and you will have to repay your owing through small instalments over a fixed period of time.
It’s pretty much the same as a home loan or car loan - but in this case, you’re using it for reasons that are personal to you. Speaking of which, when does it make sense to take up a personal loan? Here are four times to consider:
1. When your credit card debt is too overwhelming
Did you know that credit card interest rate is one of the highest there is? Credit cards are extremely important in this day and age, but it requires you to have proper control of your finances in order for it not to bite you in the back.
Credit cards typically come with a 15% p.a. interest rate, and if you don’t pay off your balance in full, you’ll easily grow your existing debt as the rates are compounded over time. (Oh, there’s also late payment fees, in case you were wondering.)
To help with this, personal loans in the form of ‘debt consolidation loans’ would be a wise move to help you stop the bleeding and nurse your wound. But wait - why would you take on a loan, when you already have so much debt?
Well, debt consolidation loans were made with a single purpose: to help borrowers get out of debt. Imagine if you could combine everything into one loan at a single interest rate. This, our dear readers, is called a debt consolidation loan.
Personal loans have a much lower interest rate than credit cards, so by getting a debt consolidation loan, you’ll essentially use the money to pay off all your credit card debt. By doing so, you now have zero credit card debt - only the personal loan, which thankfully comes at a much kinder interest rate.
Read also: What Is Debt Consolidation? How To Make It Work For You?
2. When you need to pay for an urgent medical operation
Although you can always rely on our government hospitals for a more economical access to healthcare, there’s no argument that being treated in a private hospital would give you the speed, comfort, and attention like no other.
So, when it comes to your health, you should always have sufficient money for emergencies. Or better yet, have your own (or your company’s) medical insurance to help foot the bill. But what do you do if you don't have access to such financial assistance?
In cases like this, a personal loan would be a good idea as it will help you get the medical attention you need before it’s too late. Your health always comes first. Just remember to ask for a little more than what is quoted, as most cases will require you to go for follow-ups and rehabilitation work in order to get you back on your feet.
3. When you want to take up a course to help you grow
You could be looking to do your MBA, or simply trying to learn a new course to upskill yourself. If you’re unable to get a scholarship for your course, you could consider taking up a loan to help you improve yourself.
In any case, investing in yourself is always the best thing to do. (Provided you actually put into practice what you’ve learned.) At the end, you’re only adding more value to yourself, which may make you a more attractive candidate to your future employers.
Read also: How to Get Your Loan Approved: 8 Factors Banks Look At When Lending You Money
4. When you want to start your business - or give it a boost
On that note about investing in yourself, you can also do the same for your own business. To start a business, you must first have some money to kickstart your journey.
You will need to spend on your initial market research, your tools, your workspace, your product, and most importantly, your team. As they say, you have to spend some, to make some.
If you already have a business, you may need a little boost at this point to help you weather through the storm. The Movement Control Order (MCO) has taken a huge toll on many lives and companies, which is why businesses must evolve and adapt to the new normal in order for it to survive.
Upon assessing your business, a financial boost will help you make the right adjustments where you need it (e.g. digital payment system, online marketing, logistical support). Do this right, and you may just achieve more than just staying afloat in a difficult time.
Read also: 10 Tips To Get Back Your Customers For Malaysian Businesses During COVID-19 Pandemic
A personal loan makes sense if it adds value to your life
We’d say that getting a loan to buy the latest designer goods and gadgets in order to keep up with your friends… isn’t a very good idea. It’s always good to spend within your means, so avoid using loans for unnecessary purchases that don’t quite add value to your life.
If you’re considering getting a loan, it’s important to first compare the loans available at your fingertips before committing to one. There are various requirements and key points that you will have to check such as the interest rate, your minimum income, your citizenship, and the loan tenure.
Don’t ever jump into a personal loan without first comparing it against other loans. To start, click below: