Australians had personal loan debt amounting to $144.7 billion in October 2020. This is far less than the year before when the personal loans amounted to about $166.9 billion. Interest rates of personal loans have dropped about 2% from 2015 to 2020. The reason was that fewer people were applying for personal loans.
What does this mean for you? This rate drop can be your cue to apply for a personal loan at super-low rates and improve your lifestyle. You may already have a few ongoing loans, so why take another?
Why Take Another Loan?
Such low rates come along once in a blue moon. The pandemic has put the personal loan market in a crunch and forced banks to reduce rates to attract customers. Some banks have interest rates lower than or equal to your home loan rates.
Hence, you can apply for a loan and fulfill some dreams that you have been putting off due to tight finances. Some of the ways that you can use the loan amount are:
Go For Your Dream Vacation:
Everyone has a dream vacation. It could be a single spot or multiple places. It could be an African Safari, sailing on a luxury cruise liner, or skiing on the snow-capped Swiss mountains. No matter where you can make this a reality by using the loan amount. So, enjoy your vacation now and pay for it in the next few months or years. You will make memories that last a lifetime.
Upgrade Your Wheels:
You have been using the same car since college and could use an upgrade for various reasons. This is where a personal loan comes in handy. You can either replace your current vehicle with a new one or upgrade your existing car. Upgrades, when done right, can make your car feel brand new.
Renovate Your Home:
Your home is where you come at the end of the day. It is a place that gives you comfort and lets you be yourself. So, if you’ve been putting off that kitchen remodel or other major renovations or repairs due to financial constraints, a personal loan might be just what you need.
These ultra-low interest rates will make your plans a reality, and you can spruce up your home to make it more sleek, comfortable and increase its value in the process. Your lifestyle will improve dramatically with such home improvements.
Consolidate Your Debt:
When you have multiple loans, you need to keep track of different payments at another time of the month. It can be cumbersome, and you may miss one that can harm your credit score.
One simple but effective way to deal with this is to consolidate your loans into one so that there is a single payment rather than multiple ones. Personal loans can come in handy in such situations. You can repay all your loans of different tenures, interest rates, and payments using a single loan, which is easier to track.
What’s more? You also save on the interest on those high-interest loans, as personal loans almost always have lower interest rates in comparison.
Clear Your Credit Card Bills:
Personal loans have interest rates that are quite less than your credit card rates. Therefore, you can use them to pay off the outstanding balance on your credit cards. This payment improves your credit score and gets you more spending limits on your credit cards during the holidays. With so much debt out of your way, your lifestyle is bound to take a turn for the better.
Less Debt Means Less Stress
When you have fewer loan payments, you have less stress. For example, your high-interest credit card payments loom large, but a low-interest loan payment may be less stressful. When managing your debt, you need to analyze and figure out which debt you’d rather have. Low-interest loans are almost always the better option.
You get to pick how much time you need to repay your loan. Personal loan tenures can range from six months to five years. Therefore, you can pick the time that suits you.
If you think you can pay off the loan in 6-8 months, then you save on the interest that a longer tenure would attract, but if you can afford only small monthly payments, then go for a longer tenure, as it will not eat into your monthly budget as much.
Improve Your Credit Score
When you use a personal loan to pay off your debt, it improves your credit score drastically. Early repayment is an indicator of how proficient you are at managing your finances, which will improve your credit ratings. This will clear your path for larger loans such as a home loan.
You Aren’t Paying Too Much
Higher interest rates go directly into the bank’s coffers. With a personal loan, you can reduce your interest payments by more than half.
The average credit card interest rates are about 16%-20%, but personal loans offer interest rates as low as 4.99%. The difference is significant. Imagine what you could do with the amount you save.
Live a Better Life
When you can spend with a free hand, you get to live a better life. You can enroll in memberships you have always wanted to, eat at luxurious restaurants, have expensive wine, upgrade your lifestyle, and add more excitement to your weekends.
You don’t need to be envious of your peers anymore. Furthermore, you can live the life that you deserve. Paying for it is now even easier with such low-interest rates.
Personal loans have regained popularity due to their flexibility, attractive rates, paperless processing, virtual verification, and transparent approval system. You, too, can get a personal loan that’ll help you live the good life and not worry about the adverse effects on your credit score.
The difference between interest rates on your other debt and the personal loan is all you need to look at. You can do much more with your finances now than you could earlier. So, stop lining the pockets of someone else when you could be lining yours.