Personal loans – a blessing in disguise or a gateway to misery? To tell you the truth, it entirely depends on how responsible are you as a borrower. Many have benefited or have eased burden off their shoulders by taking up personal loans, while many have seen their lives going downward spiral.
If you have the financial ability to pay off the borrowed amount within the stipulated period of time, then there’s nothing to worry about. Of course, you have to be quite sure of not making any delayed repayments.
When should you apply for Personal Loan?
Though most Malaysians understand the basic concept of personal loan, still there’s a void somewhere that’s deterring the millennials to opt for it. Most people take personal loans for dream vacations, weddings, home renovation, and the likes. While it’s perfectly justified to apply for loan to meet these expenses, however, you can still do much more with personal loan.
Here are a few instances where you can make full use of your personal loan:
- Get a personal loan to avoid issuing a ‘bad’ cheque
Do you make payments with cheques regularly? If yes, then you must be knowing the risks associated with it. At times, due to some error, it might happen that you end up issuing a ‘bad’ cheque. So, what happens if you continue issuing a ‘bad’ cheque?
After 12 months your current account might get suspended.
The bounced check will be under the radar of Credit Bureau.
Credit Bureau will pass on the information to other financial institutions.
Other banks may close your current accounts too.
Getting a personal loan will help you avoid this situation.
2. Get a personal loan to consolidate your debt
Feeling weary with credit card debt, car loans, and other debts piling up? Consolidate all your debts by getting a personal loan with low interest. Here’s how you will benefit from this:
Bring down your total interest payments substantially.
One repayment instead of multiple repayments.
Fix your settlement period.
However, make sure that you are applying for a low-interest personal loan.
3. Get a personal loan for medical emergency
Imagine a situation where your family member has to be taken to a hospital for an operation, but because it’s a pre-existing disease the medical insurance won’t be covering the expenses. Also, you don’t have enough amount in hand to pay for the initial hospital expenses. In such an emergency situation, taking out a personal loan can be very useful.
4. Get a personal loan to boost your credit score
Maintaining multiple credit cards and repay the interest-clad amount every month can be a huge burden on your financial health at times. Relieve the pressure by paying off your multiple credit card debts with a single personal loan. However, ensure that you are opting for a personal loan with low interest rates. Personal loans are considered as instalments and not a revolving credit. So, if you pay off your outstanding credit debt, it will automatically lower down credit utilisation. Having a low credit utilisation will help boost your credit score. And who doesn’t want to have a good credit score? After all, you will be in banks’ good books!
5. Have an emergency fund
We all know that life’s unpredictable. In dire financial situations, you can opt for a personal loan and simultaneously establish your savings. For such situations, make sure that the tenure is a bit long so that you can build your financial credibility over time.
Do you need a personal loan? Are you sure of the amount, tenure, and the actual reason behind you taking out the loan?