Money For Lunch – What are the Different Purposes for a Loan?

What are the Different Purposes for a Loan?

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Taking out a new loan offers many possibilities for how to use the money. You might not realise that even if your credit score is less than perfect you still have access to lending facilities. You just have to choose how to spend the new borrowing wisely.

Here are a few different purposes for a loan.

Debt Consolidation

One of the leading reasons for borrowing money is to reduce your finances to something more manageable. We can end up with scores of different credit cards, store cards, personal loans and the like. It can all get to be too much. Who can keep track of the annual interest rates and charges for late payments that get levied to some accounts? It gets very messy and is a challenge to keep up with different payment amounts on different dates for a variety of lenders.

To resolve the issue, in part, it can be sensible to choose to consolidate the debt by using a new loan to repay all the other debts. Sometimes this is done because the new loan is cheaper than the other debts with all the interest and late fees tacked on, but other times it’s just done to make life more pleasant. There’s a good peace-of-mind factor to repaying several accounts to drop down to just one loan to remember to pay every month. You can also change the repayment period to make the monthly payment easier to handle too.

Holiday

Borrowing to go on a holiday is a popular choice too. If you’re wanting to do that, then look for a loan period that’s shorter, so you won’t be still paying for several years for a holiday that’s long been forgotten about. If you plan ahead, you can book holidays ahead of the season you wish to travel and enjoy steep ‘early bird’ discounts. Alternatively, if you’re flexible about what time you take off, then last minute booking for places like the Greek Islands are a good bet.

A travel agent might also have a list of the latest package holidays that are being sold at a discount that week. You may or may not know which hotel you’ll be staying at or even which Mediterranean island they’ll choose to send you. So, you’ll have to be flexible if you want to enjoy the cheapest prices. With a steep discount, any loan you take to pay for a holiday will be enough to cover the package holiday, some holiday supplies like a bathing suit and towels, and local spending money too.

Car

Buying a car requires a more substantial loan. Not every loan, especially when having bad credit, is going to be enough to buy a new car. However, a loan might be enough to buy a reasonable decent used car. You also need to be aware that even if your credit score is less than perfect, you could still get a car on loan if you use a bad credit loan provider such as Everyday Loans.

If you’re finding that your current vehicle is a bit of an ‘old banger’ that’s consuming more in petrol and repair costs than its value, and has over 100,000 miles on it, then you probably would be better off replacing it with a newer model even if you have to borrow to do it. It could be cheaper in the long-run. It’ll also avoid you being late to work because your car broke down for the 5th time, which could be trying the patience of your boss!

Home Renovations

Renovating your home is a good idea if it’s in disrepair. When the roof is looking decidedly dodgy and needs replacing, the old boiler has seen its best days, or the sofa is down to the springs, opting for a loan to pay for some much-needed home renovations or furnishings isn’t necessarily a bad idea. You have to look at what areas require the most TLC and get some price quotes for any handyperson work that’s required to fix piping or other issues that you cannot do yourself.

Remodelling the home to make cosmetic improvements is another way to go. We all like to say that these improvements add to the value of our homes, but that’s not necessarily the case. When the changes are too specific to personal tastes, it can lower the value of a home or make it more difficult for the estate agent to sell it because the buyer will have to pay to scrap the changes and remodel again. That’s certainly worth bearing in mind when considering a loan for this purpose.

There are many ways to use a loan sensibly. Even when spending it on fun things like a holiday or a new sofa, you can usually get a good deal for cash, or when booking in advance or at the last minute to get a bargain. This can reduce the amount needed or leave some spare to put into savings for a rainy day. The main thing is to have a purpose for taking out a loan, otherwise, you’ll likely fritter away the money and won’t have enjoyed it because it wasn’t spent on something you planned out carefully first.

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