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Personal loans are borrowed money that can be used for large purchases. Such as debt consolidation, emergency expenses and much more. These loans are paid back in monthly instalments. Over the course of a month to 84 months. Repayment period may take longer depending on your circumstances and how diligent you are with making payments.

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Here are the top nine reasons to apply for a loan and when they make sense.

  1. Debt consolidation.
  2. Alternative to a payday loan.
  3. Home remodeling.
  4. Moving costs.
  5. Emergency expenses.
  6. Appliance purchases.
  7. Vehicle financing.
  8. Wedding expenses.
  9. Vacation costs.

Get Pre-qualified for a Personal Loan

Answer a few questions to see the amount you pre-qualify for. The process is quick and easy, and will not impact your credit score.

How a personal loan works.

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After you’re approved . The funds you receive will be deposited into your bank account in a lump sum. So The transfer may take as a little as 15 minutes. Depending on the lender. You’ll have to start making monthly payments as soon as the loan is disbursed. This ensures your credit health improves.

Most personal loans have fixed interest rates. This means that your payments will stay the same every month. These are also typically unsecured. So there is no collateral behind the loan. If you don’t qualify for an unsecured loan. You may have to use collateral to be approved, like a savings account or property. You can also ask a friend or family member to co-sign on your loan to help so that you get approved.

Top reasons to get a personal loan

While it’s always important to carefully consider your financial situation before you apply for a loan. Sometimes it is the best way to finance a large purchase or project that you can’t afford upfront. Here are the top nine reasons to get a personal loan.

Here are the top nine reasons to get a personal loan.

1. Debt consolidation loan

Debt consolidation is one of the most common reasons for taking out a personal loan. When you apply for a loan and use it to pay off multiple other loans or credit cards, you’re combining all of those outstanding balances into one monthly payment. This grouping of debt makes it easier to work out a time frame to pay off your balances without getting overwhelmed.

One of the best advantages of using a personal loan to pay off your credit cards is the lower interest rates. With lower rates, you can reduce the amount of interest you pay and the amount of time it takes to pay off the debt. Consolidation allows you to pay off credit cards in finite terms with a clear end date in sight.

 Using a personal loan to pay off high-interest debt, like credit card debt, allows you to consolidate multiple payments into a single payment with a lower interest rate.

2. Alternative to payday loan

If you need money for an emergency, using a personal loan instead of a payday loan may save you hundreds in interest charges.

Payday loans have short repayment terms, usually between two and four weeks. This quick turnaround time often makes it difficult for borrowers to repay the loan by the due date. Borrowers are usually forced to renew the loan instead, causing the accrued interest to be added to the principal. This increases the total interest owed.

Personal loans have longer term lengths and will generally cost the borrower much less in total interest.

3. Home renovation loan

Homeowners can use a personal loan to upgrade their home or complete necessary repairs, like fixing the plumbing or redoing the electrical wiring.

A personal loan is a good fit for people who don’t have equity in their home or don’t want to get a home equity line of credit or home loan. Unlike home equity products, personal loans often don’t require you to use your home as collateral. In that way, they are less risky.

4. Moving costs

Personal loan funds can help you move your household belongings from one place to another, purchase new furniture for your new residence, transport your vehicle across the country and cover any additional expenses. Using a personal loan for moving costs can also help you stay afloat if you’re moving somewhere without a job. This way you can avoid raiding your savings or emergency fund.

5. Emergency expenses loan

If you have a sudden emergency, like paying for a loved one’s funeral, using a personal loan could be a low-cost option.

Surprise medical bills are another common reason to take out a personal loan, especially if your doctor requires payment in full. Common medical treatments that may require the use of a personal loan include dental work, cosmetic surgery, fertility treatments and other procedures that can cost R5,000 or more. Expenses like medical travel, parking, medications, service animals and aftercare also can be effectively financed by a personal loan.

6. Appliance purchase loan

Household disasters can strike unexpectedly. If you suddenly need to buy a new washer and dryer but don’t have the funds on hand, a personal loan can provide relief. Other large purchases, such as an entertainment center or gaming computers, can also end up costing more than what you have in your checking or savings account.

Personal loans allow you to purchase major household appliances and electronics immediately, rather than having to wait months to save up for them. Though you’ll have to pay interest and potentially upfront fees, a personal loan can save you time and money in the long run, since you’ll be able to avoid using laundromats and other short-term but expensive alternatives.

7. Buy a vehicle loan

A personal loan is one way to cover the cost of a car, boat, motorcycle, bakkie or even a caravan. It’s also one way to pay for a vehicle if you’re not buying it from the company directly.

For example, if you’re buying a used car from another consumer, a personal loan will allow you to purchase the car without emptying your savings account.

8. Wedding expenses loan

A wedding loan can be used for big-ticket items like the venue and bride’s dress, as well as smaller expenses like flowers, photography, the cake and a wedding coordinator.

You can also consider paying for the engagement ring with a personal loan. Depending on the kind of ring you’re getting, engagement rings can easily cost several months’ worth of your salary. If you don’t want to deplete your savings account, consider a personal loan to help make your engagement and wedding exactly the way you always dreamed it to be.

9. Vacation Loan

Your average vacation might not cost enough to necessitate taking out a personal loan, but what about a honeymoon or a luxury cruise? Whether you’ve just graduated and want to go on a trip or you’re celebrating an anniversary, personal loans can help you finance your dream vacation.

Should I get a personal loan?

If you need a quick influx of cash to pay for necessary expenses, a personal loan may be a good option. Interest rates for personal loans are usually lower than those of credit cards, especially if you have an excellent credit score.

Of course, you should always weigh the benefits with the drawbacks. After all, taking on a personal loan means taking on debt, and you’ll need to be prepared to make payments on that debt for a few years. If you don’t have the monthly budget for principal payments plus interest, reconsider the amount you need to borrow or the way in which you borrow.

Why choose a personal loan over other types of loans?

Whatever your loan purpose, you’ll likely have several options available to you. Financing is available through credit cards, home equity loans and more. However, in many cases, personal loans are an ideal solution for consumers. Personal loans are often less expensive than credit cards, and funding is faster than with home equity loans or HELOCs.

Additionally, because there’s usually no collateral tied to a personal loan, it’s a less risky form of financing than secured loans like home equity products — meaning your home, vehicle or savings account is not immediately at risk if you default.


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