Is a personal loan the right choice for you?

Sometimes in life, you want something, and you want it now. Sometimes this desire is founded by a realistic need and other times it is a pure flight of fancy. Sometimes you would rather have something now and pay it off later. In times like these, a personal loan can really help you out. Most financial institutions offer personal loans and it would be wise to spend some time comparing personal loan interest rates before diving in.

Local lenders like Newcastle Permanent offer great personal loans so visit their website to get started. There are a few other to look out for when applying for a personal loan, let’s see if this type of loan is the right choice for you.

Loans ranger

The first question you should be asking yourself is “do I need the funds right now”. Personal loans in general offer lower interest rates than say, a credit card, but higher rates than more tailored loan products. If you already have debts with high interest rates, a personal loan can be used to consolidate these debts and give your more financial freedom.

A personal loan is also an excellent way of building a credit score, and a small manageable personal loan could be an excellent choice for the first-time borrower. Unsecured loans have the additional benefits of being easy to apply for and usually offer flexibility when it comes to paying off the loan earlier or re-withdrawing funds.

Collateral and security

This type of personal loans is referred to as unsecured, meaning that the lender has no guarantee of getting their money back. An unsecured approach makes the loan less complicated but also riskier. This risk of no return drives up interest rates charged on a personal loan. If you have a good credit rating, in general you are a ‘safer’ customer and will enjoy lower interest rates.

You may also choose to put an asset up as security when applying for a loan. This product is called a secured personal loan, and its one that you should give some consideration. For a quick rundown on the terms and conditions of a secured loan visit Newcastle Permanent Building Society website.

Secured personal loans carry very little risk to the lender and combined with a good credit history make for attractively low interest rates. A common example of this type of loan is a secured car loan, in which the car being purchased is used as security against the loan.

Lend us a hand

So, we have established the difference between the two loans. A secured loan is fantastic when financing a new car, but what if you don’t qualify for a secured loan? Is a personal loan worth it? As stated earlier, it really depends on what you need the funds for. There are many who believe personal loans should only be used for emergencies or situations where you absolutely need cash up front. Of course, this is all personal preference (see what I did there?) No one knows you and your situation better than you, and if you are in doubt, seek professional advice.

Loans, what are they good for?

Emergency renovations or vehicle repairs might call for a quick injection of funds, in these cases a personal loan could save a lot of pain and drama. If you have a large amount of high interest debt, consolidating this debt with a lower rate personal loan could be a welcome relief for your finances. Luxury items like a crisp new TV or the classic Bali holiday might seem like needs at the time, but if you can wait and save for these yourself, why pay interest?

Whether you need a new car, or the roof of you house has collapsed, there are a multitude of financial institutions offering personal loans. Compare rates and features between them to find the best loan for you. As always, the market is competitive so don’t be afraid to shop around and negotiate for a better deal.