Perhaps when you hear the word “loan” it gives you the impression of anything but positive. Sure, it is synonymous to a debt, and no one is exactly comfortable with the thought of having so many debts. But is it really that bad? The truth is, loans do not have to seem all that bad. In fact, if you know how to use your loan for the better, it can actually be beneficial in your life. The key is not using to extra money you get from your loan into completely useless and unimportant things. As long as you keep this in mind, you should be fine with a loan under your name or even borrowing from licensed money lender.
The following are among the things that make a personal loan quite useful in your life instead of adding to your problems. Consider reading through these top reasons for taking out a loan in Singapore and discover how these can be advantageous in your life.
1. Provide financial assistance to your friends and family members
There are always some unexpected moments in your life when an immediate need for extra cash comes. This is why if you have a family member or a friend who comes to you for financial assistance, then a loan may help to cover this need. Your loved one may find himself suddenly unemployed, or a loss in the business might have occurred, which had a negative impact on his financial situation.
In this case, it is more practical to take out a loan application than to get a lump sum out of your personal bank account. After all, you never can tell when an emergency will come your way. So, if you give a huge chunk of your money to a family member who is in need of additional funds, you may have a problem dealing with your own concerns when they come. Plus, there may even be a possibility that the person who is borrowing some from you may not be able to repay the amount.
When you take out a personal loan, you can pay it off in terms and in such a smaller amount of money. Just be sure to look for one offering manageable and reasonable repayment terms, so you can settle the amount without any issue.
2. Take out a personal loan when you have limited funds from your renovation budget
Are you having trouble with keeping up with your renovation costs? If so, then a personal loan may come in handy during such time of need. Since there is a cap on a reno loan, then it is not impossible for a shortage on funds to arise.
When you find yourself worried about having insufficient budget for your renovation expenses, it is certainly worth it for you to take out a personal loan. You can have an additional amount of money for your project, yet without sacrificing your savings. Just make it a point not to overspend on your budget and try to stay within your limits in terms of the expenses to spare yourself from getting into deeper troubles.
3. Consolidate your debts using a personal loan
Having multiple debts on several credit cards can be a huge pain to deal with. Not only do you have to think about the varied payment due dates for all cards, but there are also massive interest rates that add to your principal debt. So, it is smart to think of a way to consolidate ll of these debts to slowly free yourself from deeper issues with your finances.
A personal loan can be a practical solution to consolidate all your debts and pay them off to eventually free yourself from more loans. By borrowing an amount that should suffice in covering the payment for all of your credit card debts, you can start working on being completely debt-free.
Of course, this would mean being more disciplined with how you spend your money and saving more from your paycheck. Slowly, you can build your finances as you continue with this habit. Just start with consolidating your debts to no longer suffer from high interest rates from your credit card, and you should soon find yourself free from these debts.
4. Use the money for massive purchases
You probably have been wanting to go on a trip, yet you are not quite keen on dipping into your savings account to pay for your accommodation, plane fare, and have some pocket money. In this case, you may want to take out a personal loan that can cover expenses for your trip.
The good thing about taking out a loan instead of using your existing funds from your bank savings is just to prepare for unexpected circumstance that may come your way. You never know when an emergency might occur, which can completely put a damper on your vacation. Losing all that you have in a robbery or suddenly finding yourself unemployed are just some of the many situations to ruin your finances. If you have a loan to pay for your expenses instead of your own money, then you can bounce back with your emergency funds still intact.
5. Spare yourself from expensive rates and fees that come with cash advances
The last thing that you should even think about when you are short on cash is to take out some extra money from cash advances. The interest rate can be astronomical, so it will be a major disadvantage to even consider activating your card’s cash advance feature. There is a fee that goes at around 6 percent of the amount you withdraw. So right away, you have already lost some money. On the other hand, there is no upfront fee that comes with a personal loan.
6. Buy a wedding ring using your personal loan
If you are a little short on cash, yet you need to buy a wedding ring, then it is better to just take out a loan and forget about using your credit card. Generally, the interest rate that comes with a credit card purchase is at 24 percent, which is significantly higher than the 6 to 8 percent from a personal loan.
Interestingly, you may even come across a promotional period where lenders or banks offer a 0 percent interest on loans. If you can take advantage of this great deal, then you are pretty much going to have an easier time when you get to settle your debts within 3 to 6 months.
7. Skip those insurance claims
There are special rewards that you can receive from not having to make insurance claims up to 5 years. If you want to take advantage of this great benefit, then taking out a loan for your repayments would be a smarter way to go. You can even retain bonuses or discounts in your insurance policy, yet without suffering from the consequence of being broke and buried in debts.
8. Settle late payments with a personal loan
You do not want to pay your debts late since there are penalties for doing so. But if you have pressing expenses that must be paid immediately, it may be worth using a personal loan to cover these. By doing so, there will be no serious penalties on a late payment, and you can just pay off your loan in terms for an affordable amount of money.
There you have our top tips on how to use your personal loan wisely. If you are having some financial difficulties and dealing with credit card debts or unexpected expenses seem to be too overwhelming, it may be beneficial to just take out a loan to get the amount you need. This should take the load off your shoulders without significant drawbacks on your bank account or financial situation at the same time.