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Published on April 18th, 2018 | by Jones

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Most common reasons to take out a personal loan

You may be a student and already aware of the world of student loans. But what about personal loans? And, yes, there is a difference. Student loans allow you to study without worrying about paying back the loan immediately. When you get your first job after you obtain your degree, you’ll be able to start paying back your student loan. A personal loan requires monthly payments and are, therefore, not really used for studying purposes.

Nonetheless, as a student, you still need to know about personal loans. You’ve definitely heard about people taking out personal loans, but you’re not exactly sure what for. Well, you’re definitely reading the right article if you want to find out more and decide whether you’ll be needing to take out a loan, after all.

To finance a car

You may have a car already or you’re staying walking distance from campus and have no need for a car right now. When you start working and needing to travel between home, work, clients and family, you’re going to need a car. But cars are expensive and not everybody has money lying around to start the finance process. Especially not students right out of university.

Vehicle loans are paid on a monthly basis in installments that you make sure you can afford. By making use of a loan, you’re ensuring you have a reliable vehicle at your service. There’s not much point in buying an older car because it’s more affordable (sans a loan). You’ll end up paying more for it, in the long run, to service it and maintain its roadworthiness. Rather take out the loan and finance a car that will last and be safe on the roads.

To renovate a home

To buy a home, a personal loan may not be enough or the right kind of loan for the purchase. However, when you have your own place one day, you may consider taking out a personal loan to renovate the house. If there is a new addition to the family, there’ll need to be a new addition to the house. And if there are any major repairs that need to be done, a personal loan can help you out here as well.

You want to make sure your home is a safe environment for all those who live in it. And that usually requires spending a decent amount of money. But housing is not something you want to compromise on, so rather just take out the loan.

To afford a wedding

You may be in a committed relationship at the moment or you’re still rocking that single life. But the time may come when you meet “the one” and want to start settling down by getting married. If you do this right out of university, you won’t really have the money. And if you’re still building your way up the ranks at work, you may still have a good few years of saving ahead of you.

Nobody wants to wait that long to marry the person they love. And taking out a personal loan is a solution to the problem, unless you have parents that are able to pay for your wedding or contribute to the costs. And before you think you can afford a wedding, the average cost for a small wedding of 80 people can be around R80 000. So. No. You can’t just afford a wedding without budgeting ahead.  

You can even use a personal loan for the honeymoon costs. Or, you know, to take a holiday together anyway.

To manage debts

Credit card debt is a real thing and the chances of you experiencing it one day are quite high. You run the risk of debt as soon as you sign up for a credit card. What some people do is actually take out a personal loan to pay off their credit card debt. Now, that sounds counterintuitive but you will, in some way, actually save money.

It works as a debt consolidation that combines all debts into one payment and has a chance to decrease the interest rate. You’ll need to personally weigh up the pros and cons before considering whether this is the right financial move for you or not. But if things aren’t looking too good in the credit-card or debt department, you may need to take out a personal loan.

To start a business

Should you want to start your own business one day, you’ll need financing. Which, most of the time, comes in the form of a personal loan. It’s a great way to get what you need to start out and it should be easy to pay off as the business starts generating an income.

Basically, if you find yourself in a situation where you don’t have the money to one-time buy a product or service that you need or desperately want, personal loans are the pay-off answer. If you can afford the monthly installments of your loan calculated with a loan calculator before the time, then there’s nothing really stopping you from getting what you want.  

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