When a person hears the term ‘personal loan’, they would often say it should only be used as a last recourse when one doesn’t have the funds to pay. As much as possible, it should be avoided by everyone, especially those who are just starting to work or build their credit ratings.

As a result of this belief, many do not see the positive benefits of getting a personal loan even there is no clear need for it.

Does money make the world go around?  

There is a saying that says ‘money makes the world go around’. You need to have funds prepared for all eventualities, even if you do not have a use for it now. Even if you put your money into investments or insurances, it is still possible to be broke if you do not have accessible funds in the bank or on-hand.

You also disable yourself from getting new opportunities even if you do have something prepared for the future.

Fortunately, if you are pressed for cash right now, loans can assist you to create a regular cash flow.

When Should You Ask for a Personal Loan?

Many moneylender companies and financial experts would say a personal loan is there to protect whatever cash you have on hand.

However, what is the right moment for you to ask a moneylender to lend you a loan? There are at least four possible situations you can be in before you should consider a loan.

  • If your savings are almost at the red or total wipe-out
  • If you are going to work for jobs that have small cash outlays
  • If you will catch your dreams and ambitions
  • If you are paying low-interest loans

Saving your Savings Before It Goes Red

Let’s face it.

You need to use to use a lot of funds to make your life easier. If you live in a house that is poorly modified, you need to get it renovated and fixed. If you find yourself in need of hospital care, you need to pay your bills based on how long you stay. Once the bills come in, you may ask where you can get the funds to pay them.

You can get the funds from your life savings and pay them in full. However, there is a danger to this because it may take you years before you can return your savings to what it was before you touched it. If another event requires you to spend again, you won’t be able to afford it.

If you have dependents relying on you for their needs, it is ideal you do not touch your savings as much as possible. You can use that for other important expenses, like sudden medical assistance.

In order to save your savings for these sudden occurrences, getting a personal loan can help you out. Even if you need to pay the loan monthly, you would still have ready money for your immediate expenses and your savings are intact for those emergency bills.

Maintain Cash Flow During Low-Cash Opportunities

Opportunities are everywhere if you know where to look. It could be an investment offer, an exchange program or a chance to get a doctorate or master’s degree.

While the opportunity is tempting, many tend to pass on them because of the cash outlay or the fees you will need to shoulder during these opportunities. Although you do have to pay once for these opportunities, the returns would be immense once you finish them.

Unfortunately, initial fees for investments, exchange programs and other similar opportunities can be daunting as they can set you back for a few years while completing the program. If you suddenly have to stop during the middle of your program, you also risk the investment you already paid for to finish it.

If you get a personal loan during this time, you can focus on your program without having to worry paying the fees until you finish it.

Fulfill Your Dreams without Going Broke

Every person has a dream they would like to fulfill before they age to the point it is impossible to do. Some may dream to go around the world in style, others go on a religious pilgrimage, or do extreme sports. These dreams can be quite expensive, both in time and money.

Extra funds can only go so far to fulfill these dreams and it is quite impractical to use your savings for these dreams. You would need a vast sum to fulfill your dreams.

Personal loans can assist you to fund your dream without dipping into your savings or your finances. However, it is ideal that your repayments do not go beyond 30% of your monthly income. You still need to support your other expenses after all.

Paying off low-interest loans

Paying off your car loan? Home loan? Credit card bills? Usually, paying for these loans can be done monthly to pay them off.

However, what if you have some funds on backup? Should you use all those funds to pay a chunk of your loans?

While it is ok to pay off your loans faster, you are risking yourself on being broke and with no funds to use for other expenses. When you pay off the loans and suddenly found yourself in a pinch like sudden sickness, you can’t take back the money. Getting a personal loan can assist you to remain afloat and even pay for these small loans.

Research and Decide

As the saying goes, do not judge a book by its cover. While many people say personal loans should be avoided because it would just put you in debt, it has benefits that can help you in the long run if you do it right. Make your research and consider all the options available before you decide on getting a personal loan to help you protect your savings.

If you go for the personal loan, make sure stick to your repayments and stay committed! With a little planning, you can be financially ready for anything that comes your way!