People always get confused before they plan to opt for a personal loan. A proper guidance and assistance will lead them to choose the right one considering their current financial situation. To understand what a personal loan is and how it is used, give this article a read.
Our team at BestShortTermLoans has answered all your possible queries regarding a personal loan. Let’s start from the very beginning.
What is a Personal Loan?
A personal loan is often an unsecured loan which is borrowed from banks, lenders, credit unions, brokers or any other financial firms to meet an individual’s financial needs. This type of loan doesn’t require any security or collateral while availing and moreover, the borrower has the flexibility of repayments.
Various factors and parameters are considered by a lender, credit union or bank before approving an individual’s application for a loan. Some of these factors are credit score, debt-to-income ratio, credit report, a proof for showcasing a proper source of steady income, etc.,
Now, the question is, when should you actually consider to opt for a personal loan? What situations should help you know the right time to choose this loan? The next section of this article describes in details, that when should you know that you are in need of a personal loan.
When should you take out a Personal Loan?
Nobody takes or even thinks of taking out a loan unless and until there is some financial emergency that needs to be treated as soon as possible. A few possible and most probable reasons that make an individual apply for a personal loan are listed below:
1. Repair Work
We all know that home is such a place that needs and demands for repair from time to time. Sometimes, the damage reaches an extent that avoiding it any longer may cause a bigger problem. Taking out some extra money to repair a few things becomes extremely difficult when you are running tight on your monthly budget already. In such cases, a personal loan will be beneficial as you can opt for the loan and payback with an easy and affordable repayment schedule.
Many of you must be wondering that in this case, they should choose a home improvement loan rather than a personal loan. But, we suggest that for small-scale home renovations or repair work, a personal loan is the best option. Repainting the house for an upcoming event or festival, fixing the upholstery, redesigning and rearranging the living room, all such things can be managed with a personal loan.
2. Medical Emergencies
In case of medical emergencies, quick cash becomes an ultimate necessity. An easy personal loan may help you get rid of the financial burden as it will help you cover the medical expenses immediately. An emergency doesn’t hit someone by informing, but such scenarios are always uninvited and arrive suddenly.
3. Wedding in the Family
Weddings are never celebrated in a manner which is less than any festival. Although these expenses are one-time it takes away a large chunk from your savings. Savings are always recommended to help you on rainy days. Therefore, opt for a personal loan to cover the wedding expenses and keep your savings intact. Because a wedding has always some last-minute problems. This small personal loan may help you manage any unforeseen and unpredicted emergencies. Also, at this crucial time, a personal loan can be treated as an extra amount of money that you can splurge. Who doesn’t love spending money? Paybackis easy EMIs and indulges in once in a lifetime experience.
4. Boost your Credit Score
A personal loan is always considered as one of the best options to boost your credit score if you have a bad or poor credit score. If you have a plan of applying for a larger loan in the future because you want to start your own venture, you need to boost your credit score and prepare your credit report so that your application doesn’t face any denial for a loan.
Need for a financial helping hand may arise due to various factors. A person may face financial upheaval at any point in time and this leads him to opt for a personal loan. These loans have the flexibility of repayments, hence, it is suitable.
But while choosing this loan, one must be aware of some traps that are generally used by few unauthorised lenders to grow their business. Always choose a reliable and trusted lending partner for the loan.
Precautions to be taken while Opting for a Personal Loan
A personal loan is an extremely convenient option with minimal documentation. These loans are very easy to apply and take very less time to get disbursed to your bank account for your usage. Still, we have noted a few precautions that one must follow and take care of before applying for a personal loan.
1. Credit Rating
Credit rating always plays a crucial role while you are applying for a loan. The Annual Percentage Rate (APR) is decided on the basis of your credit report. If your credit report is not good, you may come across deals which are expensive.
2. Shop Around
We would request you to shop and explore before applying for a personal loan. Check 10-12 good and trusted brokers or dealers for the loan. Compare their sites with each other to derive which one will work the best for you.
3. Seek Assistance
Once you know which loan broker or lender or credit union to go with for your personal loan, try to get in touch with their team to understand the related terms and conditions of that loan. Seek for their guidance and assistance on the product or service they are offering.
4. Repayment Schedule
Once your personal loan is approved, make a plan for your repayments. We would suggest you pay off your debt on time as this may improve your credit score too. Manage your monthly budget by wisely paying off your debt. Calculate everything prior loan approval to save yourself from so much of hassle.
5. Analyse the Risk
What if you are not able to pay off the debt? What will be the consequences to the failure of payments? Calculate the risk and prepare a contingency plan beforehand.
Apply for a personal loan at BestShortTermLoans today. We do not charge any extra or upfront fees. Our team is available at 24/7 to provide any assistance that you need during the selection of a product and post selection of the product. You also have the flexibility to redesign and customize the loan plan that we fetch for you. Tailored made personal loans are available at the slide of your thumb.