The 7 Best Reasons to Get a Personal Loan
Everyone encounters financial difficulties in their life. This can be caused by your monthly spending exceeding your income, rent increasing annually, the birth of a baby or a medical emergency.
An outstanding debt, such as a student or car loan, can also cause you financial stress.
Getting a personal loan is one strategy you can consider to overcome your financial difficulty.
If you are an Emirati, a personal loan for UAE nationals can be used for practically any need you have that falls within reason and the lender’s given terms.
When to Apply for a Personal Loan
Although you can use a personal loan for anything, it is unwise to get one for a frivolous reason, or just to have a loan.
However, a personal loan can prove to be highly useful when you get it for the following reasons:
1. Paying Off Outstanding Debts
One of the most common and best reasons to apply for a personal loan is to use it to pay your debts and bills.
Getting a loan is a form of debt consolidation. You can use the proceeds to pay your credit card bills or other existing loans.
When you combine all of your outstanding balances into one monthly payment, you will find it easier and less overwhelming to pay for them.
This is because when you apply for a personal loan, you can look for one with the lowest interest rate. As a result, you reduce the amount of interest you pay every month.
Additionally, you can choose a payment period that you find more convenient. Because of this reason, you can pay your consolidated debt within a shorter amount of time or extend the repayment term.
Another advantage of using your personal loan is that you will be able to free up more of your income to cover your other regular and important expenses.
2. Financing Home Improvement Projects or Repairs
If you want to give your home an updated look or finance a major repair or renovation, a personal loan can help you cover all the expenses.
A personal loan is a better option than a home equity loan for homeowners who want to invest in a home improvement project. This is because you won’t have to use your property as collateral.
Additionally, since a home equity loan is secured, you are at a higher risk of losing your property in case you fall behind on payments.
Lastly, compared to a home equity loan, you may find it easier and quicker to get a personal loan.
Whether you want to have your plumbing system upgraded, replace your roof, or add a new room to your home, consider getting a personal loan to finance it.
3. Purchasing New Appliances
Buying a new fridge, dishwasher, washing machine, air conditioning unit, or kitchen hob can put a huge dent in your finances. Whether you are replacing a broken one or upgrading it, a personal loan allows you to purchase them with less stress and difficulties.
Personal loans allow you to buy a major household appliance faster since you won’t need to save for months in order to make a big purchase.
As a result, you can go about your household chores quicker and more conveniently.
Other big ticket purchases, such as an entertainment centre or computer, usually cost more than what you have in your savings account.
Regardless of which appliance you need, a personal loan can help you get it within a shorter time frame.
4. Paying for Unexpected Expenses
Emergencies, including hospitalisation and the unexpected death of a loved one, can be pretty expensive.
Even common medical treatments, such as dental procedures and physical therapy, usually require a fortune too.
A personal loan can pay for these medical treatments, dental procedures, and the funeral of a loved one. It can also cover ancillary expenses, including medical travel, medications, and veterinarian bills.
Unexpected car and appliance repairs can also be considered emergency reasons to get a personal loan.
Since personal loans can be released quickly, it is another financing option that can help you pay for an emergency or unexpected expense.
5. Financing a Vehicle
Although getting an auto loan is the most popular way to pay for a car, a personal loan is also another option you can consider.
Auto loans are also secured debts and use your vehicle as collateral. This means that your car can get repossessed if you miss a few payments.
You can also use your personal loan to lease a car if you want to rent instead of buying one.
Aside from cars, you can also use the proceeds of your loan to purchase or hire a motorcycle, trailer, boat, and other recreational vehicles.
6. Funding a Relocation
Moving, whether locally or internationally, can break the bank. Hiring your movers, buying furniture for your new home, and paying for additional repairs or improvements can cost you a lot of money.
If you don’t have substantial savings, consider taking out a personal loan to pay for your moving expenses.
You can use your loan to cover all moving-related expenses and any unexpected ones. With this solution, you can avoid raiding your savings or emergency fund.
If you are expecting a huge expense when you are relocating, consider taking up a loan to ease your burden.
7. Budgeting for a Major Life Event
Finally, important events, such as weddings, anniversary parties, or christening parties, can be costly. They could be less expensive if you have access to additional funds, which you can get from a personal loan.
If you are planning a wedding, you can use your loan for various big-ticket and less expensive items, such as rental for the venue, the bride’s dress, cake, flowers, photography, and services of a wedding coordinator.
You can also use the proceeds of your loan to buy your engagement ring.
Your honeymoon can also be more special and memorable if you can splurge on it, which you can do when you have access to additional funds. Applying for a loan can pave the way for this.
If you have always wanted to reward yourself and your family with a luxury vacation, you can also do so without dipping into your bank account or saving for years.
A personal loan can cover your airfare and other travel costs, accommodation, food, entertainment, souvenirs, and any additional costs that come with going on a holiday.
Aside from having a good reason and clear plan for your personal loan, having a digital bank account in the UAE at one of the trusted financial institutions can help you get the funds you need with less stress and work.
Because of this reason, study the different products well and the provider to ensure you get a loan that’ll work for you.