A personal loan is generally an amount of money that is lent to you with no specific purpose or requirement attached to it. It is paid off in instalments over a predetermined period.
The concept of a personal loan has been around for a very long time and in its fundamental form, this type of product has not changed very much in nature. One thing that has changed however, is the ease with which one can be obtained. While in the past there was a rather long application process, your credit score was checked and you then received an approval (or not), nowadays, technology has made the personal loan even faster and more popular, with applications being done in real time on your smartphone and money transferred almost immediately. This innovation in the attainment of loans has meant that personal loans have gone even more mainstream and become a default source of funding for many individuals.
However, just because it’s easy to apply for a personal loan, does this mean it’s right for you? Before jumping into any loan contract, you should first ask a few questions:
What do you need the money for?
While personal loans are generally available to use on anything, consider whether another product may be more suitable for you. For example, if you want the money to purchase a car, perhaps a secured car finance product would be better suited. Personal loans are generally best for smaller purchases that are not considered assets (such as a car).
One of the great things about personal loans is that they offer a lot of flexibility, so there are lots of possible ways that you can spend the money.
Some common reasons for getting a personal loan are:
- Consolidating or refinancing high-interest debt
- Making a large purchase (such as an appliance, furniture or an electronic device)
- Taking a holiday
- Making home improvements
- Financing a small business purchase or expansion
- Paying for a medical procedure or expense
- Paying for a wedding or an engagement ring
- Helping you to balance your budget
For larger expenses, a personal loan can be a more cost-effective form of borrowing than a credit card, because they generally have lower interest rates and a fixed term.
Could you opt for a secured loan?
Personal loans are generally unsecured, which means they are not tied to an underlying asset. This means you are generally free to do what you want with the money. However, the flipside is that you may be charged a higher rate of interest than if it were secured against an asset, as there is a higher level of risk present for the lender. A secured loan may also allow you to borrow a larger amount of money.
What are some other options?
As well as secured loans, there are some other ways you can access the money you need quickly. For example, a Cash Advance does not require a credit check or other types of documentation. This sort of loan is usually repaid in 1 – 2 months (up to 62 days), whereas a personal loan must have a Credit Check, includes bankruptcy status qualifications, and is repaid over a longer period.
Or, if you’re in a real hurry to access your money, you could opt for an SRG Cash Flash Visa Card. This allows your Cash to be available to you within minutes of approving your completed loan documents, rather than having to wait overnight. With the card, you can withdraw money from any ATM throughout Australia that accepts Visa. You can also add your own funds to the card via ‘pay anyone’ through your Internet banking.
What is the interest rate?
Understanding the interest rate that is being charged on your loan will help you determine if it’s worth paying all of that for the item that you are intending to purchase. This can also help you determine if there’s an alternative way. For example, if you need the money for home improvements and the interest rate is 15%, you may better off drawing from your mortgage, which will have a lower interest rate.
Can you afford the repayments?
It’s all well and good to take out a personal loan if approved, but realistically, you need to determine whether you are able to meet the repayments every single period for the entire term of the loan. If this is questionable, you should not be taking out a loan as not paying it off in time (or at all) could ruin your personal financial position.
Whatever your reason for needing some extra cash, personal loans offer an easy and cost effective solution to your problems. SRG Finance offers personal loans of up to $2,500, which can be repaid over an easy 3 – 12 month period. Get in contact today to discuss your application, and your short term personal loan could be made available for withdrawal from your nominated bank account the same day or overnight using electronic funds transfer.
