It is a common misconception that only people who are in dire need of money apply for personal loans. This is a myth. There are many wealthy people who also apply for loans and here is why – applying for a personal loan gives you leverage and liquidity. A personal loan is a loan used for all intent and purpose. For instance when you want to pay for your higher education, you have education loan or when you want to pay for a new car, you have a car, you cannot use your education loan and go on a shopping tour because for specific loans such as the ones mentioned above, the bank will send the loan amount directly to the merchant. But with a personal loan, you can use the money for whatever strikes you’re fancy. When you have hard cash in your hands, you can spend it many ways that make it more advantageous for you.
Say you already have existing debt on your hands at a much higher rate of interest. Under such circumstances, you can use the money from your personal loan that you have gotten at a much lesser rate of interest to pay off your existing debt, be it another loan, or any other line of credit. When it comes to your credit card bill, a balance transfer might seem like a much better option because it is offered at interest rates that is even lesser than personal loans, however, when that is not an option in you case, you can always use a personal loan even to pay off your credit card outstanding bill as well.
It is true that you can always take a business loan to fund any business projects you have pending, but the problem with this loan is that you need to be in your current business for a specific period of time, usually 2 years without making losses to get an approval for the loan from anywhere. There are even additional requirements such as business registration and Income Tax Notice of Assessment among others. You might not meet all the criteria but that shouldn’t stop you from doing what you love. You can start a side business and use your personal loan to fund this passion project. And you never know, after a year or so, your own passion project can pay off your personal loan after the first year.
Of course, taking a course in a skill you want to develop is one option when you want to beautify your resume, but you can also use a personal loan to take a few months of unpaid leave from your business or company and use that time to upgrade your qualifications and skills at your own pace. This free time on your hands even gives you the freedom to experiment on different things and find one that enhances your skill set further. Obviously, there is a risk involved here because a personal loan is not free money, you will have to repay the loan in time whether you have a job or not. You might incur a temporary loss in the beginning but once you develop your superior skill set, you might make thousands off it and it might even raise your monthly income significantly.
Financing tools are like abstinence, it is difficult is refrain from using them. The only aspect you need to pay attention to is to use them wisely and not carelessly because if you fail to use them, it might cost you a lot more and not necessarily in terms of money. There will be some time in life where you might need a loan, whether it is buy a new house, a new car etc. You can benefit from the loan tremendously if you use it wisely because loans are meant to better your current situation in life. Therefore use the loan to better your life in the long run and not think or make only short time goals when you use the loan amount. You can always take a personal loan and buy clothes and shoes and bags, but what good will that do in the future when you may not even fit into clothes or shoes or carry an outdated bag?
You need to learn to use the money in a responsible manner to reap the benefits in the long run because loans of any kind are meant to aid your life situation and are not luxuries for you to splurge in. When you apply for a loan, you are accepting responsibility for the repayment and using it for the intended purpose for you to apply for the loan.