Whatever your financial needs are, a personal loan can help you achieve your financial goals.
We're going to delve into the world of personal loans and tell you everything you need to make the most of yours.
Personal loans are an Aussie favourite and form a part of the backbone of the borrowing and lending scene.
Personal loans can be split into a series of types and sub-categories giving the borrower leeway to design the loan exactly the way they want it. With personal loans being so vast, it can be quite daunting to know exactly where to begin.
You will learn what a personal loan is and what it involves; the various types of personal loans as well as some of its sub-categories. By the end of this article, you will be able to see why personal loans are an Aussie favourite and why they should be yours too.
Personal loans, for personal matters
The purpose is in the name: personal loans are perfect for financing personal matters. Whether you are short on money for that well-deserved family vacation, want to make a large deposit on your vehicle loan or want to perform some good old DIY, a personal loan is what you are looking for. Some people even take out personal loans to start their own businesses.
Personal loan uses
- To upgrade and repair your home.
- To purchase furniture and household appliances.
- Funding the purchase of a vehicle.
- Wedding costs.
- Covering medical and cosmetic bills.
- To start a business.
- For purchasing equipment and expensive items.
Personal loans are highly flexible
The borrower has control over how much they would like to borrow, how long they would like to borrow for and how frequently they would like to make their repayments, i.e.: weekly, fortnightly or monthly. Another attractive attribute is that the money can be used to finance anything the borrower’s heart desires.
If you have overestimated the amount you need for your renovations then feel free to use the rest of the money for a weekend away or even use this amount to make a large repayment on the balance outstanding.
Ultimately, personal loans translate to financial freedom. The freedom to decide how your finances will be organised is finally within reach and all with the assistance of a single loan.
Secured & unsecured personal loans
Personal loans come in two different types: secured and unsecured loans. These are not unfamiliar terms in the loan scene but do impact the personal loan differently. That being said, whichever option you decide is best for your needs, it's advisable to use a loan calculator to determine exactly which loan type and loan amount is best for you.
Briefly, a secured loan requires a form of security to obtain the loan that the borrower is applying for. This means that the borrower will need to own property or a vehicle to offer as collateral.
This option allows for higher borrowing amounts, lower interest rates, and longer borrowing terms because the asset provides security for the lender. If the borrower is unable to repay the loan, the asset will be sold and the balance due will be deducted from the sale of the asset.
On the flip side, unsecured loans do not require any collateral. However, lower borrowing amounts, higher interest rates, and shorter loan terms are the price paid for not having collateral due to the increased risk the lender is taking.
Generally, a secured loan is always preferable because of the better rates. However, a longer loan term does not necessarily mean better. The longer the repayment term, the more interest, and charges are accrued over time.
Before choosing a loan type, the borrower needs to determine which option would be more affordable and better suited to their current financial situation.
A jack of all trades
Personal loans are truly a jack of all trades. Whatever your need, a personal loan will help you to see it through.
Debt consolidation for better debt management
One of the greatest uses of a personal loan is for debt consolidation. A debt consolidation loan pays off all current debts (credit cards, store cards, small loans), so that the borrower only needs to repay a single loan amount.
This way the borrower does not waste money repaying interest and fees on a variety of loans and benefits for a more easy to manage debt situation.
Home renovations for a better standard of living
Saving to build on that extra bedroom for junior or adding on that pool might take too long. This is why a home renovation loan is a perfect choice for upgrades. The best thing about renovating/building on to your property is that you are adding value. This way you are directly investing into the value of your home while improving your standard of living.
Take that family vacation you’ve been dreaming of
Take the family on the getaway that they deserve. Spend some quality time with your partner and children or travel to the exotic places you have always dreamed of. A personal loan can help to pay for anything from the plane tickets to the accommodation. That dream vacation is not as out of reach as you thought it was!
Make sure your special day is the best it could possibly be
Your special day only comes around once in a lifetime and you want it to be exactly as you always envisioned. A personal loan can help you to pay for the perfect venue or design the ultimate wedding dress. Save yourself the worries on finances and focus on more important things like cake tasting!
As you can see, personal loans are used for a variety of personal matters. Finance does not always have to be for the bad, sometimes you need a loan to help finance the good things in life! Remember to compare your loan options and always make sure you’re needs are being met before accepting a loan quotation!