Personal loans are fairly straightforward financial products. A personal loan is where you borrow a specific amount of money, usually from a financial institution, and then repay the debt with interest in equal payments over an agreed term.
Personal loans offer the general advantages of being cheaper on average than the closest alternative (credit cards) as well as giving the discipline of a repayment schedule.
Many personal loans allow the borrower to make extra repayments. Every dollar you repay above the required repayment shortens the life of the loan as well as the overall cost.
There are two different types of personal loans that can be taken out.
- Secured Personal Loan
- Unsecured Personal Loan
Reasons For A Personal Loan
Medical/Out Of Pocket Hospital Costs
An out of pocket cost is the difference between the amount a doctor charges for a medical service and what Medicare and any private health insurer pays. Out of pocket costs are also called gap or patient payments.
Debt consolidation is bringing all your existing debts together into one new debt, which can help you manage your repayments and give you a clearer picture of your financial future. You typically do this by taking out a new personal loan to repay your other existing debts, and then paying this new loan back over a set term.
Are you dreaming of a holiday but don’t quite have the money to make it happen? Do you find yourself daydreaming about adventures in a foreign land or picture yourself lying on a deserted white beach, listening to the waves? Well, your holiday daydreams may not be as distant as they seem.
Motor Vehicle Purchase
There are a number of ways you can pay for a car, and if you don’t have the funds up front, a personal loan could be an option.
A personal loan can be used to buy a new or second-hand car from a dealer, or private seller.
Property Settlement Transactions
There are many fees associated with purchasing a property and a personal loan can assist with those. These include:
– Loan establishment fee
– Valuation fee
– Lenders Mortgage Insurance (LMI)
– Documentation preparation fee