Should You Get A Personal Loan?
You may be among those thinking of making a big-ticket purchase in the next few months. If this is you, but you’re wondering where to get the cash for your purchase, you should consider a personal loan. They’re a great way to pay for large expenses, because you can spread out the cost of the purchase at a schedule more friendly to your wallet.
Wondering if you should get a loan? Here are 4 reasons to consider taking out a loan for your next big purchase:
1. It is fast
Because you don’t need a collateral to get a personal loan from a bank, you will be able to get the money much faster than with a car loan or home loan.
Personal loans can be approved and released in as little as three days.
2. It is flexible
Products like car loans and home loans can only be used for just that — cars or homes. But each person will have financial needs beyond those two things.
You may need to make a loan for a different purchase, such as an expensive appliance that you need to replace, a wedding to be funded, or even tuition fees for your children. With a personal loan, you can use the money for any purpose. This way, you can use your loan for whatever it is you need.
3. It is fuss-free
In most cases, all you need to apply for a personal loan is a government-issued ID and your income tax return or three months’ worth of payslips. If you’re self-employed, you may need a few more documents.
But on the whole, applying for a personal loan is simple, and once you’re approved, you can even get the loan proceeds deposited straight into your bank account.
4. It is constant
Unlike credit cards, which will charge interest upon interest, the monthly amount you need to pay for a loan stays constant throughout its life. You and the bank agree on a payment schedule, and as long as you stick to it, you won’t be surprised with more fees.
For example, for a P50,000 personal loan, your monthly amortization for a 12-month term would be P4,767. But if you charged that P50,000 to your credit card, and you paid that same amount monthly, it would cost you P3,500 more, and take one month longer — and that’s assuming you don’t use your card for anything else in the meantime.
When you get a personal loan, you can take comfort in the fact that you know exactly how much you’ll be paying every month, and for how long. There are no surprises, and you can plan your budget much easier with this constant.
Should you go for it?
The answer depends on your circumstances. A personal loan will enable an individual to get through an emergency, fulfil their necessities or even your simple wants like the latest gadget or a nice vacation.
You can even use it to consolidate several debts into one personal loan. By consolidating all your high-interest rate debts and combining it into a single, lower interest rate loan, you could reduce your monthly repayment costs. However, you will need to be careful as this could mean extending the length of your loan and end up paying more overall.
Most lenders will check your credit reports and ask for income information, though proof of assets are often not required. Banks tend to approve loan requests quickly for borrowers with a strong credit background. However, it is important for you to ensure that you are able to honor their loan commitments, as failure to do some may affect your credit rating or even land them in legal trouble.
It is very important for you to weigh the pros and cons before you make the decision to apply for a personal loan.