Personal loans come to your rescue for a number of
purposes. However, whether or not they are good or one that must be avoided has
to be decided upon. Let us find out when is it a bad idea to take out one and
when you must steer clear of the same. Read on.
Why you must get one?
Prior to getting into the depth of the
subject, remember, personal loans are in no way quick fixes and it is someone
else’s cash that you are using, which you eventually have to pay off. So, take
out a personal loan or for that matter any type of loan only if it is a wise
move.
· Helps in improving your financial condition
If you think,
by availing a personal loan, your financial commitments can be met to a certain
extent; you must undoubtedly opt for one.
· Paying off credit card debts
If you are
planning to reduce the debts on your credit cards or pay off your credit cards
as a whole, availing a personal loan makes sense. Just remember, do not forget
to go for loans comparison so that you
are able to get the best deal.
Compare
lenders and the costs that you have to incur for each lender as far as upfront
fees, rates of interest, duration of the loan, and repayment mode of loan is
concerned. If you are aware of these aspects, it becomes easier for you to
manage your loan repayment better.
When you
decide to pay off credit card debts, pay off the debt you have on the credit
card that has the highest rate of interest.
· Avail benefit of lower interest rates
Oftentimes, it
is seen that personal loans have lower interest rates as compared to interest
attracted by credit cards. Under such circumstances, you can avail loans so
that you can enjoy the benefit of the same.
· Improve your credit score
There are
times, when you would like to improve or work upon your credit score. If you
have this in mind, you can go for one and pay off religiously so that your
regular repayment behavior of loan gets reflected in your credit report, thereby improving your credit
score.
When personal loans must be avoided
It is not that
these loans will bail you out of debt always. There are instances, when taking
these loans might prove to be more harmful than good. What are these instances,
let us find out.
· Extravagant expenses
On several
occasions when you are tempted to spend for shopping or purchasing any goods or
items that you cannot afford. However, you cannot refrain from buying the same.
It is then that taking out these personal loans is not a very good idea.
Instead of
impulsive shopping, you can start saving from now if you are really inclined to
getting that product for yourself, which you have been longing for long. Any
impulsive decision pertaining to your finances usually does not yield positive
results. So, it is best to save for the rainy day and start saving now!
· Take on additional financial burden
It is a well
known fact that availing loan when you are already in debt is not a very good
idea. It only adds to your present financial burden. It is a proven and tested
scenario that once you take a loan, unless you are able to pay off within the
stipulated period of time, you get into a vicious debt cycle. So, steer clear
of taking out a loan if you already knee deep in debt.
Whatever is the reason for either
availing these loans or deciding not to take out one will depend on individuals
and their financial condition at the time of taking out the loan.