As with any financial product, when it comes to taking out a personal loan, it really pays to shop around and compare APRs. The APR (annual percentage rate) specifies the real cost of a loan taking into account the interest payable, any other charges, and when the payments fall due.
Your bank may say it offers preferential rates to its current account customers; however, you may still find there are cheaper loans available elsewhere. It’s important to research this topic and make certain that you understand everything that you are signing before you sign it.
Not everybody can live in the lap of luxury and thankfully, financial institutions realize that. The following are the most common reasons for a loan.
1. Getting Rid of Debt
If a business has to wind up or an individual does not know how to manage his finances, he will go into debt. The good news is that there are certain loans that exist solely for this purpose- that is, to help you get out of the financial mess. One such loan is called Debt Consolidation which you can use to combine the different debt amounts and pay it all off in one go.
Property prices are rising and there is no better way to increase the amount of money you have than buying some property. Wait for the cost to go up and then sell it- what could be easier? Getting a loan for this purpose is the smartest thing you can do in your life.
For most people, their car is one of their biggest investments, and if you’re tired of cars that break down all the time or just won’t start, getting a nice car for a change can make the world of difference.
Unexpected car repair bills can also be quite expensive, so if the transmission has gone on your car or the head gasket has cracked, you either need a loan or a bus pass. If you need your car for work, you may need to borrow money to get it fixed quickly, then slowly pay it off as you can afford to.
This may not make much sense, but many people take a loan to finance a holiday getaway. A need may also arise when a death occurs in another country and one does not have enough money to cover all the costs. Try not to go for a secured loan in this case, if you do at all.
Every bride wants the perfect wedding and unfortunately, it doesn’t come cheap. However, most couples find it perfectly normal to spend massive amounts of money for one single party and if they don’t have that kind of money, they go get a loan. They can always take another one to finance the perfect honeymoon as well.
Before you apply for this loan, check the small print to see if you are for it eligible. Some best buys come with some nit-picky conditions. Again, it’s important to research the topic so that you are aware of what your requirements are.
It’s against the law to have school-aged children not attending school, so if you are going to be short on your school fees, you’d better borrow some money so that your kids get the education. University fees are not very cheap, so to avoid having your education put on hold, you’re best to borrow now and work it off later.
There are a number of options, you can consider, but most schools in US cost over $15,000. If you want to go to an Ivy League school, expect to pay more out of the pocket.
7. Emergency Expenses
Those who don’t have medical insurance or find it difficult to pay off all their bills at the end of the month, tend to apply for loans. However, make sure that you pay the required amount within the prescribed period of time to avoid a serious crisis.
8. Buying a House
This includes paying the initial cost for the house, then the furniture and fittings and lastly, the contractor for his services. If you don’t have enough to pay for the whitewashing- you can take a loan for that too!
9. Home Improvement
If you plan to sell your house, it is common knowledge that if it is in sparkling condition, you will get more offers. Therefore, fix the broken roof, tinker with the plumbing and paint the walls. If you don’t know how to pay for it, take a loan- it will be worth it. The value of your property will increase and you will make enough money to pay it all back comfortably.
10. Starting a Business
Some businesses are capital intensive while the rest are labor intensive. If your business falls into the former category, you will need to apply for a loan.