Nowadays, loans have become accessible to everyone, irrespective of their level of income or credit scores. Lending institutions and banks eased their lending terms and conditions to widen their client base and tap into new market segments. For loan seekers, the ease of acquiring personal loans has made them a viable option to settle debts and finance long-term investments. If you take a look around, you’ll notice that almost everybody in your circle has a debt of some kind. It has become quite rare for people to use cash for big purchases, even if they do have the money. Instead of straining their cash flow liquidity, they choose to take out a loan and pay for a new car, house, etc. in monthly installments. If you’re still unsure of whether or not you need one yourself, this article might be of help.
Here are 3 reasons why you may need to apply for a monthly loan.
1. To Settle Your Debts
This is one of the most common reasons why people apply for monthly loans. You might have gone through a rough patch where you had to max out your credit card to pay for an urgent hospital bill or accumulated school tuition. A monthly loan can help you get out of such a sticky situation. Do your research and scan the market for the lowest interest rates and reasonable monthly installments that you can comfortably afford. Most banks and lending institutions will ask you for proof of income and inquire about your credit score to mitigate their risks and ensure payback to protect their profitability. However, as you have read above, the entire lending process has become way more flexible than it ever was. So, don’t let your less-than-perfect current financial situation discourage you from acting and applying for the loan that you need to stay afloat.
2. To Finance Home Renovations
There comes a time in your life when remodeling and renovating your home becomes a necessity rather than a luxury. Serious issues like roof damage, structural issues, and termite infestation will require you to do a major renovation for your home. In such cases, applying for a monthly loan is your best option to get the money you need. If you’re worried about your bad credit score, the lending professionals https://www.bugiscredit.sg/ explains that with monthly loans, a below-average credit score is not a deal-breaker. You can either bring on a guarantor or take out a secured loan. However, you should keep in mind that there’s a good chance you won’t get the full amount you initially applied for. Once you get approved for the loan, you’ll be able to plan your purchases accordingly without having to worry about finding suppliers that accept payment installments. You’ll be paying the monthly installments to your lender instead. It’s important to note that loans work best for essential renovations. As for luxurious home improvements, loans aren’t cost-efficient. Adding a pool in the backyard, for example, is not worth taking out a loan for; cash is a more financially-sound payment method in that case.
3. To Pay Your Bills
No matter how good of a financial planner you are, life sometimes gets in the way. Being hit by unexpected costs that seem to come out of the blue is simply inevitable. Meanwhile, in the background, your routine bills keep rolling in and have to be paid before their due dates. Loans are not exclusive to one-time big purchases. In fact, it makes more sense to take out a loan to pay your late electricity bills instead of having to live through the hot summer months without an AC! You can’t deny the associated risk of taking out a loan but if it’s for pressing responsibilities such as paying monthly bills, it is definitely worth it. To make sure you don’t burden your bank account further, you have to take your time considering various offers from different lenders. You can also consult a financial adviser who can help you identify the ‘sweet spot’ where you feel the effects of having surplus money minus the struggle to pay off the monthly installments. The good thing about taking out a loan to pay your bills is that it won’t be an urgent matter. You know when your bills are due, so you can give yourself enough of a buffer to research your options and find the best loan that suits your needs.
Applying for a monthly loan is not an easy decision. You should take your time to make sure you absolutely need a loan before you rush into such a long-term commitment. In a way, you’re willingly choosing to put yourself in debt. However, considering the above reasons and the predicaments you would be avoiding, monthly loans may be the best solution in some cases.