5 Reasons To Choose a Personal Loan Over Another Type of Debt

By October 17, 2021 December 20th, 2021 Personal Loan

When it comes to financing, there are a number of loan and credit options available to everyday Australians. One of the most popular choices is the Personal Loan. Another very popular choice is the credit card. While credit cards can be handy, they have some disadvantages in comparison to taking out a Personal Loan.

Let’s take a look at some key reasons why you should choose a Personal Loan over a credit card or other forms of personal finance, such as pawnbroking loans and so on.

#1 – A Personal Loan Has An End Date

When you take out a Personal Loan you’ll choose the loan terms. In other words, how long you want to repay the loan. Banks tend to offer terms ranging from 1 to 7 years, depending on the amount of money you borrow. Private lenders offer terms from as little as 2 months upwards for people who want to get out of debt sooner.

When there is an end date in sight, you have a goal to work towards. With a credit card, unless you aim to repay the balance in full if you just keep making the minimum monthly payment, that credit card debt never actually ends.

#2 – Personal Loans Offer Better Interest Rates Than Credit Cards

Although you can occasionally get a good deal on a credit card when it comes to the interest rate, most of the time, a Personal Loan is going to offer you a much more competitive rate of interest than a credit card. Of course, the interest rates vary from lender to lender for both Personal Loans and credit cards, and can even be personalised based on your credit history. It is best to do your research and read the fine print.

#3 – Personal Loans Can be Used for a Variety of Purposes

Unlike some other types of finance, like mortgages, Car Loans, Caveat Loans and so on, a Personal Loan is quite flexible and the funds can be put towards a number of different things.

What’s the reason you need a Personal Loan?

Once you’ve answered that question, you’ll be able to verify with your chosen lender whether your loan spending intentions meet their lending criteria.

Some popular uses for a Personal Loan include:

  • Wedding expenses
  • Holidays
  • Home improvements
  • Purchasing furniture
  • Car repairs
  • Debt consolidation
  • Medical reasons
  • And more…

#4 – No Collateral Is Required for a Personal Loan

Many lenders give you the option of secured or unsecured Personal Loans. A secured Personal Loan requires collateral but tends to have a lower rate of interest than an unsecured loan. The advantage of the unsecured Personal Loan is you don’t need any form of collateral to apply for and be approved for the loan and you’re also not risking your possessions while repaying the debt.

Not requiring any collateral, or even having to come up with a deposit, makes a Personal Loan one of the most attractive finance options available today.

#5 – Use a Personal Loan To Consolidate Your Credit Card Debt

As mentioned earlier in the piece, credit cards can present ongoing debts that never seem to end. The longer you maintain an outstanding balance on a credit card, the more interest you’re going to pay.

If you have two or more credit cards that you are struggling to stay on top of, you’re better off taking out a Personal Loan to pay out those credit cards and get rid of them once and for all. Consolidating your credit card debt with a Personal Loan will give you an end date, reduce the amount of money you pay in interest overall, and you’ll only have one regular repayment to think about. This repayment will also generally be lower than what you were paying monthly on your credit cards combined.

Debt consolidation of your credit cards will allow you to get on top of your finances and put more money back in your pocket.

Get a Great Deal On Personal Loans

Cashify offers some of the most competitive deals on Personal Loans. To learn more, either browse our website or get in touch today and discuss your options with our friendly staff.

Disclaimer: Please note this content is of general nature only and does not take into account your personal objectives, financial situations or needs. For advice tailored to your financial situation, it is advised that you seek guidance from an accountant or financial advisor. The information contained in this article is correct at the date of publication.