Fear Not: The Personal Loan is Here to Help

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Are you wanting to travel the world, but are on a tight budget?

Are you eyeing off your dream car, but can’t scrape together enough funds?

Do you want to undertake home improvements, but don’t have the equity?

Are you having trouble paying medical bills, and can’t afford to help a loved one?

Taking out a personal loan can support you in any situation where you feel strapped for cash, are in a stressful position, or are on a tight budget. Personal loans are typically used for purchases of an individual nature and last a short period, usually between 12 months and five years. While commonly associated with the dreaded notion of debt, they can be powerful tools when wielded responsibly. Under the right circumstances, personal loans offer significant benefits that lend to your future financial or personal goals, or to support you in a tough period.

However, before diving into the personal loan pool, you need to determine if your feet can touch the bottom. You can do this by testing the waters; set yourself a limit after discussing your financial situation with a mortgage broker. By setting yourself a reasonable goal, you will be able to decide on your loan type with more certainty.

Depending on the size of the loan you require, it may be difficult to obtain from mainstream lenders. If the amount is less than $5000, you may find a credit provider who offers one with incredibly high-interest rates and fees. In this case, it is probably best to use a credit card. You can view one of our previous blog posts where we provide advice on how to use a credit card wisely.

When deciding on an appropriate interest rate, it is important to research the type that will suit your repayment limits. While it is important to pay off your loan as quickly as possible to reduce the interest paid, you need to consider the conditions of each interest rate.

Fixed rate

 This type of interest rate is locked for the entirety of the term. You do not have to worry about a fluctuating rate, however, if you want to make extra repayments occasionally, there are additional fees you will need to pay.

Variable rate

This interest rate will fluctuate throughout the life of your loan. While you have the ability to increase your repayments at any point, you need to consider whether you will be able to afford them at all if the rate increases.

Before deciding on the interest rate, make sure you shop around and research other offers available on the market. Like when deciding on a suitable type of interest rate, you need to determine the loan type that will be right for you.

Secured Loan

 When choosing a secured loan, you must offer an asset as security. If you are unable to make repayments, your credit provider will repossess your asset without taking you to court.

Unsecured Loan

While these loans are usually harder to obtain, you do not need an asset to offer as security. The interest rates on this type of loan are usually higher, considering the risk the provider is taking. In this way, you need to convince lenders of your financial position and credit worthiness.

At Select, we offer competitive rates and tailor loans to suit the needs of our clients. If you answered yes to any of the previous questions or are thinking about taking on a personal loan for any reason, send us a message or organise a no-obligation free appointment with one of our friendly brokers to discuss what is available to you.