Personal loans can be enormously helpful for a number of life events, such as securing the funds for a big personal purchase, or covering the costs of a big move or emergency expense.

If you are low on savings and don’t want to put a big expense on a credit card, a personal loan could be right for you.

Understanding personal loans

Low interest rates: A personal loan is usually an unsecured loan, which means that you don’t have to provide collateral to be able to borrow. Your lender will offer you a loan and interest rate based on your borrowing history. A personal loan can be much better option than putting big expenses on a credit card, as personal loans usually come with a much lower interest rate.

Multi-purpose: You can usually use a personal loan for just about any purpose, from investing in business to renovating your home. Other loans might place restrictions on what you can use your loan for, but a personal loan allows you flexibility.

Consolidate your debt: Thanks to the lower interest rate of a personal loan, you can use the funds to consolidate high-interest debt and save yourself a lot of money. You can even pay off several loans at once under the umbrella of one single personal loan. This is a great option if you’re finding it difficult to pay off your loans on time and stacking up high interest payments as a result.

Use as a personal line of credit: Most people think of personal loans as a lump sum, but you don’t have to use them that way. You can choose to use your loan as a personal line of credit with a low interest rate, connected to your bank account. This is an easy way to have some extra funds to tide you over if needed, and you won’t have to dip into your savings.

Improve your credit score: Many people assume you need good credit to get a personal loan. Even if you don’t have good credit, a personal loans specialist like ‘Wonga’ may be able to help you. Repaying your loan will improve your credit rating, as personal loans count towards your credit score.

Overall, personal loans can be extremely helpful in a variety of circumstances when you have a big expense and want to avoid paying high interest rates. Research what kind of loan would work well for you, and plan out a repayment schedule that suits your lifestyle and your needs best.