4 ways a Personal Loan could make your life better

Personal loans are something a lot of people shy away from, thinking it’s a sure-fire way of getting into more debt. But there are a lot of instances where a personal loan isn’t only an option, it’s probably a better idea than slapping something on the credit card.

Here’s 4 ways a personal loan can make your life better.

1. You’ll likely get lower interest rates than a credit card A personal loan will likely give you a lower interest rate than that of a credit card. While credit cards do have varying interest-free periods, those aren’t as straightforward as they’re made out to be. If you haven’t paid off the full balance of your credit card, that interest-free period is probably out the window. But with a personal loan, you know where you stand. It is important to remember that the interest rate on a personal loan varies depending on the amount, the length of time you take to repay it and your credit score, so it’s important to do some research and choose the option that best suits your needs.

2. A personal loan can help improve your credit score As long as you’re making all your repayments on time, a personal loan can actually help improve your credit score. This is because you’re showing the lender you’re a ‘responsible borrower’, able to meet your debt obligations. And a higher score can open the door to lower rates. This is a double-sided coin, though. If you’re struggling to meet your repayments, it’s important to get in touch with your lender to sort out a new repayment schedule. If you start missing your repayments, your credit score could be negatively impacted. Since a higher score can help open up give you more options, it’s a good idea to find a responsible way to boost it.

3. You’ll take a little more time to think about your purchase With all the immediacy modern technology gives us these days, it’s easy to rush into decisions before really thinking them through. But if you’re applying for a personal loan, you have to take a little extra time to think before whacking that new item on the plastic-fantastic. You might find that taking a short time to think about your purchase shows you it’s a little frivolous, and you could actually put that money to better use.

4. Personal loans are more flexible than other loans If you’re looking at an equity loan, a home loan or a vehicle finance loan, you quickly see that you can only use those for specific purposes. A personal loan, though, has a lot more flexibility and can be used across a far wider range. This flexibility can be really useful, as you may just need a little extra money to buy some supplies to do up the house, but don’t need much. Or, you can use the loan for multiple tasks, like contributing to fuel, buying a present and investing in some new equipment for your job. With other, more specific loans, those options aren’t available.

The most important thing to think about when you’re considering a loan is making sure you can meet the repayments. As long as you can do that, a loan can prove to be a very useful, flexible tool. It could even be cheaper than using a credit card and could help improve your credit score for future borrowing.

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you.