Thinking of Getting a Personal Loan? Consider These 5 Situations First

Are you in need of immediate cash? A personal loan might just be the answer! But before you go applying for one, there are some things you may need to consider first.

Personal loans are widely available throughout New Zealand. If the bank deems you eligible, you can borrow as much as $70,000 for a low-interest rate. With a good credit score, some banks can even offer a 0% interest rate with minimal to no additional fees at al!

While you can easily apply for a loan, it doesn’t mean you should. Some Kiwis are often lured into borrowing money just to purchase that new designer bag or appliance that they don’t actually need. Before getting one, ask yourself… do you really need the money?

To help you decide, here are 5 situations when you should apply for a loan.

1. To pay off consolidated credit card debt

If your debt is piling up one after the other, you can take out a personal loan and consolidate the debt to help pay it all off. Paying off a debt with more debt seems impractical, but it’s actually a good idea. Loans usually have lower interest rates than credit cards, so this means that you pay without the unnecessary interest.

Another good thing about personal loans is that you can pay it off over a longer period of time. Some banks will even let you pay it off with low interest for as long as five years.

2. To refinance your personal loan

If your credit score has improved over the years, you can manage your loan payments better by refinancing it. This is a good choice if you want to decrease your payments or if you found a better deal with a more favourable interest rate.

Aside from reducing the weight of your payments, this is also a good way to take a cosigner off your personal loan.

3. To pay costs during emergencies

If your insurance policy doesn’t cover a home repair after a calamity strikes, car repair after a car crash, or a medical procedure if you were to fall ill, borrowing money through a personal loan might be your best option.

After all, your investments – and above all, your life – remains more important than paying off another debt with a low-interest rate for several years.

4. To pay for immediate expenses

If unfortunate circumstances such as a sudden death of a loved one were to happen, a personal loan might help to shoulder the costs of the funeral and burial. This can be a sensitive topic to talk about when applying for a loan, but it can be of great help.

Accepting the sudden loss of a loved one is hard, but you still need to think about the expenses that you need to give them a proper goodbye.

5. To purchase what you really need

As much as possible, it’s best not to take out a loan just to purchase something that you want. However, if it’s something you really need - like replacing a broken stove or fridge and you don’t have the money to buy it - take out a loan to purchase it.

Just make sure that you don’t borrow more than what you need, as it will only result in more debt later on.

A personal loan can be used to buy all sorts of things, but it’s not always a practical choice. Keep in mind that taking out a loan for unnecessary purposes can cause you financial stress later down the track. Your purchase might give you happiness for a short while… but always remember that loan ‒ or debt ‒ can take a long time to clear, or worse, a lifetime!

If you believe you can put the lump sum from your personal loan to good use like the situations mentioned, remember to be wise with your loan! Use a comparison service and a personal loan calculator to apply for the best loan that matches your needs.

Finance what you need; apply for a loan today through glimp!