Personal Loans Why Do We Need Them

Personal Loans Why Do We Need Them



Personal Loans: Why Do We Need Them?
In today’s world of​ buy now – pay later,​ we live in​ the​ land of​ credit and it’s practically unavoidable .​
Personal loans,​ along with overdrafts,​ credit cards,​ store cards and mortgages are a​ fact of​ everyday life and we simply can’t manage without them .​
Personal loans in​ particular tend to​ be a​ financial product that most of​ us need at​ some point,​ to​ help us out with short-term money issues .​
Comparing personal loans to​ other forms of​ credit gives a​ clearer picture of​ times when these are more suitable:
Personal loans or​ credit cards?
Credit cards are essential for regular use; internet shopping,​ booking trips,​ buying theatre tickets or​ car hire deposits .​
These tend to​ be instant purchases,​ whilst personal loans can take care of​ the​ bigger things .​
Holidays,​ new cars,​ home improvements – personal loans can be a​ solution to​ paying for these over a​ longer period of​ time .​
Interest on​ personal loans tends to​ be lower than that on​ credit cards,​ so the​ total amount you​ pay back should be less overall.
Personal loans or​ overdrafts?
When you​ take out a​ personal loan,​ you​ normally pay it​ back over a​ set period of​ time,​ with a​ fixed interest rate .​
While overdrafts can be handy for emergencies or​ unexpected costs,​ the​ monthly fees and interest add up and these can turn into never-ending debts .​
With a​ personal loan you​ know how much you’ll be paying each month,​ and for how long.
Personal loans or​ store cards?
Like credit cards,​ store cards can have very high interest rates and revolving credit,​ keeping the​ debt hanging over your head forever .​
For smaller items,​ or​ grocery shopping for example,​ store cards can be useful if​ you​ pay back the​ full balance each month .​
For bigger purchases,​ perhaps a​ new sofa,​ television or​ kitchen appliances,​ taking out personal loans can sometimes be a​ better option .​
Again,​ the​ term is​ fixed and you​ can see an​ end in​ sight .​
Personal loans or​ mortgages?
Major house purchases are,​ of​ course,​ much more suited to​ a​ home loan or​ mortgage .​
However,​ many people borrow an​ additional lump sum on​ top of​ mortgages to​ finance home improvements .​
The term of​ the​ loan can be anything up to​ 30 years along with the​ house purchase part of​ the​ mortgage .​
This is​ where personal loans can be a​ better idea – they will be paid off a​ lot quicker and your mortgage payments are kept separate .​
Adding value to​ your house with home improvements is​ highly recommended,​ but paying the​ costs over a​ long period can reduce the​ potential profit compared to​ shorter term personal loans.
With any financial product,​ it​ is​ always a​ good idea to​ shop around for the​ best deals,​ seek expert advice if​ you​ need to,​ and don’t overstretch your budget! Personal loans can be helpful for short term purchases,​ but may not suit everyone so do consider your needs carefully.




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