How to use a personal loan

How to use a personal loan

Taking out a loan is a positive step towards financial independence. It allows you to purchase what you need or even make significant steps towards achieving your goals and dreams. A personal loan can be used for a variety of things, such as monthly shortfall money, paying for school books and stationery or even funding your small business.

Once you have used a personal loans calculator to figure out the affordability of the loan based on your monthly expenses, you can decide on what you would like to use your personal loan for. Below are some effective ways to use a personal loan that will allow you to get the most out of your money.

Paying for schooling

Whether you are the parent of a university student, a scholar or a university student yourself, you know how expensive the costs of education can be. A personal loan can be used for elements that a student loan may not cover, such as housing, grocery shopping, textbooks and everything else related to a student life.

As a parent, you can use a personal loan to pay for school uniforms, stationery, sports kits and all the extras that come with having a child in school. The lower interest rates of a personal loan mean that you can afford to buy your child everything they need for school, without having to compromise on one item. Find out how to apply for a personal loan online and you will soon be on your way to helping your child’s or your own education.

Starting a business

Personal loans do not only have to be used for ‘personal’ uses, they can be used to fund the startup you have been thinking  about. You can send in a loan application after using a personal loans calculator and use the money to fund your next business venture.

A personal loan can help you to pay for the necessary startup costs, such as permits, materials, staffing, equipment, office space, and other business expenses while you are still in the ‘setting-up’ phase. Using a personal loan to start your business will help to prevent you from dipping into your savings or liquidating assets in order to find funds for your business. Applying for a personal loan does not require you to send in a business plan, but you should draw one up anyway to show your bank how you plan to use the money for your business.

Home improvements

One effective use of your personal loan is for home improvements. This is especially true if you are making improvements that will increase the value of your home, which can help the bank to approve your loan application.

Home improvements are expensive and can cause you to dip into your savings account unnecessarily. However, this can be remedied by taking out a personal loan. It can also help you to save money on interest compared to what you would be paying on your credit card. You might be tempted to take out a second mortgage to pay for the improvements but you will be using your home as collateral, something which can be avoided when using a personal loan to pay for the same improvements.

Emergency expenses

If you do not have a sufficient emergency fund, you could take out a personal loan to supplement it. Ideally, building up an emergency fund will eliminate the need for any sort of loan, but in life, you cannot be prepared for every eventuality.

You will find that a personal loan offers you lower interest rates than a payday loan or a loan from a service provider (such as an auto-body shop or hospital). A personal loan also does not use your home or vehicle as collateral, meaning that you have peace of mind when making the monthly contributions. An emergency fund is vital to have for any adult but can be tricky to maintain with everyday life causing hiccoughs, which is where a personal loan can help.

Pay for a wedding

A wedding can become extremely expensive, but using a personal loan to pay it off means that you have several years to repay the debt, allowing you to have a stress-free wedding, and marriage.

On average, weddings can cost in excess of R20 000 to R80 000, making it a pricey endeavour, which is where a personal loan can help immensely. You will be able to have the big day of your dreams, and not have to worry about covering the cost of the venue, the dress and the meals using your savings. You can set the terms for how long you have to repay your personal loan, allowing you to continue your life without the debt of a big wedding looming over your finances.

Conclusion

A personal loan can be used for an array of issues, from repaying student loans to starting a business, and even to pay for a dream wedding. It can make your life easier and allow you to reach the goals you have set for yourself in a quicker amount of time. Before you send in a loan application, remember to use a personal loans calculator to find out your affordability, and remember to factor in all of your other monthly costs to calculate how much you can afford for a loan.

Authored by: mjones

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