It may be hard to believe, but having debt isn’t always a bad thing. Someone who never takes on any debt at all can’t build a good credit history. At some point, you’ll probably need to buy a car or home. Therefore, taking on a loan and establishing credit is a tremendously helpful way to get those things at a good rate. When managed properly, debt can be positive in order to help you get the essentials in life that you need. For that reason, personal loans are a kind of a debt management tool in a sense that can potentially be very beneficial to your overall financial status as long as you wisely spend the money.
Today, more people than ever are reaching out to family members, friends, and even colleagues for money. Whenever the reasons why people need to borrow money, it’s obvious that securing loans in general are making a strong comeback. If your hesitant about getting a loan, keep in mind that loans can be great credit builders and help your credit overall.
Securing Loans: Good or Bad?
In terms of managing your finances, a personal loan is a powerful tool when used responsibly. However, most people think that carrying debt is generally a bad idea, and it is if you have too much. Yes, too much debt will negatively impact your credit score, but managing it efficiently will take your score to new heights. Therefore, under the right circumstances a personal loan will help you, rather than hurt you.
Here are five good reasons why it may be a smart idea to secure a loan in order to help boost your overall financial situation, keep it in good standing, and therefore increase your credit score as well.
1. You want to do some home improvements but lack equity.
Although you may be able to pay for some home improvements on your own, many times this isn’t always an option. If you plan on moving fairly soon, for instance, it’s likely that you may need to do a bit of renovating like having a new residential garage door or a Residential Stucco Remediation in order to boost the overall value of your home as well as make it easier to sell. Some of these improvements may include having the bathroom or kitchen remodeling, or replacing your roof. It takes money to pay for these costly additions and renovations, and that’s where a loan comes. Make a thorough assessment of the necessary repairs and compare it to the value of your home in order to determine if getting a loan is worth your while. In this case, securing a loan may help you get thousands of more dollars for your home in the end, which is a good thing.
- You can save money while paying down debt. Many people today are starting to save their money better overall. But, when certain things come up in life such as home repairs or medical expenses, it can overwhelm them financially. By securing a low interest loan and addressing these issues while still following a budget, people are still able to save money while paying down their debt. This is a win-win situation. Sometimes it helps to think of your money as a ‘cashfloat’, whereby you have a certain amount as your foundation and just work little by little to keep building it up.
3. You don’t have the money to pay out-of-pocket expenses for a car repair.Most everyone needs reliable transportation as a vital aspect of their ability to go to work and earn a living and run errands in general. Any car accident that’s not covered by your insurance company can mean a major unexpected car repair bill that can seriously impact your finances. While some auto repair shops allow their customers to make monthly payments regarding a pricey bill, many do not. Therefore, it may be in your best interest to take out a loan in order to pay for the costs. - It’s costing more than you expected to move.Moving is often a very stressful time, especially when you consider all the expenses that go along with it. Between hiring the movers and paying for the cost of storage, transportation, boxes, etc., the expense can quickly add up.Research reveals that the average cost to move is somewhere around £800. For people moving out of state, this cost can exceed up to £4,500 or more. While it’s tempting to just put these charges on a credit card, keep in mind that your credit card will compound your interest and will therefore cost you more in the end. In other words, besides the principle amount you’ll also have the added expense of accrued interest. On the other hand, taking out a small loan with a much lower interest rate is a more affordable option.5. Your medical bills are outrageous and unexpected.
An unexpected medical bill can potentially create a mess of virtually anyone’s financial budget. But, thanks to the way major credit bureaus now view medical bills, you’ll have a full 180 days to take care of them before they affect your credit report. This should be enough time to secure a loan and pay it off if you can’t afford the expense. In the end, you’ll be keeping your credit score in good standing. Just be sure that the loan you secure has favorable terms along with a low interest rate for best result.
When used correctly and for good reasons, a low interest personal loan with fair terms is an excellent tool for managing as well as boosting your finances in general. The idea is to keep your credit in good standing, which will make it less expensive and easier to secure financing in the future.
