Www.moneyadvice service.org.uk defines personal loans as loans that a bank or other lender make that are not secured against any asset such as your property. They are also known as unsecured loans.
- A personal loan has higher interest rates than secured loans like a home-equity loan, but you are not required to put up any collateral to ensure repayment.
- A personal loan is an unsecured loan to meet your current financial needs such as financing a wedding, a vacation, medical emergencies and many more.
According to www.businessdictionary.com, personal loans (also called signature loans) are advanced on the basis of the borrower’s credit history and ability to repay the loan from personal income. Repayment is usually through fixed amount instalments over a fixed term. They are also called consumer loans.
Personal loan, otherwise popularly called consumer loan in Nigeria, is fast gaining ground today. The absence of a unique identity for every bank customer had made it almost impossible for banks to advance personal loans to customers. With the advent of the Central Bank of Nigeria ordered Bank Verification Number, banks are now willing to grant customers personal loans.
According to www.bankrate.com, personal loans aren’t cheap, but they can be easy and fast to get compared with other types of loans. And the loan, typically between N200,000 and N3m, can be used for an almost unlimited list of needs, wants, goals and dreams.
With those advantages in mind, here are nine of the commonest reasons to take out a personal loan:
- Payment of bills
If you do not have access to funds to make a purchase or settle a bill, say school fees, then taking out a personal loan may be right for you. Personal loans can help consumers with a variety of needs in different situations. Paying down debt with a personal loan is a great solution for many Americans. They can help those stuck carrying large balances on credit cards to make small or minimum payments, especially if the interest rates on your credit cards are higher than you would have with a personal loan.
- Finance home, car etc.
Personal loans can make it easier to finance home improvements, purchase a car, or cover unexpected expenses.
- Buy home appliances
Personal loans can be used to acquire home appliances like television sets, gas cooker, refrigerator etc.
- Pay down debt
Consumers paying down debt with personal loans often see dramatic improvements in their credit. This happens because a personal loan converts revolving debt to instalment debt. This will lower your credit utilisation, that is, the percentage of the available credit you are using, according to www.bankrate.com.Consumers taking out personal loans for other needs can expect to see minimal impacts on their score related to the debt itself. However, when seeking any loan or financing, consumers should expect to have their credit pulled.
- Finance a vacation
If you’re planning a vacation with your family, personal loan or consumer loan can be of great help
- Finance a wedding
Personal loan can also be used to finance your wedding
Other obligations or plans
The list of things you can use a personal or consumer loan foris endless. The most important thing is for you to have regular source of income to pay back. Punch