Taking out a loan can be a scary process. There’s a lot of misinformation out there regarding how loans work, which lenders are trustworthy, and what happens if you don’t manage to make repayments, so separating the truth from fiction can be very difficult. If you approach taking out a loan in the right way – if you know what you’re getting into, you set out a clear repayment plan from the get-go, and you’re realistic about your expectations – then taking out a loan can be a great way to bolster your personal finances a little. Here are 9 reasons you should take out a loan today.
1. You can take out almost any amount
These days, loans are available for pretty much any amount you could want. You can find quick loans that are easy to apply for, whether you want £500 or £20,000. Thanks to various online aggregate websites and review platforms, finding the right lender to give you the correct amount has never been easier. Don’t think that just because you don’t need a lot of money, a loan isn’t the right avenue for you to take; the truth is that you can apply no matter what your requirements are!
2. Lenders are held to account more than ever
Many consider the internet to have made things harder to verify, but when it comes to lenders, there are more ways to confirm they’re above board than ever before. Review platforms like Trustpilot collect and display reviews for lenders to show you whether or not they’re trustworthy. If you see an overwhelmingly negative review score for a lender, do some digging and find out why. If it’s positive, then you know this lender can be trusted!
3. It’s easy to apply online
Before the advent of the internet, you had to apply for loans in person or via the phone if you wanted to take one out. These processes could be time-consuming and annoying, but now, many loan applications can be completed entirely online. This makes the whole procedure much easier and more streamlined. If you’re not particularly enthused about the idea of going into a lender’s physical branch and discussing your finances, then have no fear: applying online is simple.
4. A lot of things are prohibitively expensive nowadays
From weddings to vehicle financing and home remodeling, just living your life can be incredibly expensive. Taking out a loan is often the only recourse if you want to pay for these things, especially if you don’t have any savings (as many of us still don’t). Of course, there are always options; downsizing events or opting for less expensive alternatives are always good ways to cut costs, but in many cases, this isn’t possible. Taking out a loan can help to cushion the financial blow for these events.
5. You can consolidate debt
Many loans are structured specifically to help you consolidate existing debt. These loans often have lower interest rates and can be paid back with much more lenient repayment plans, ensuring that you don’t fall behind on payments. The benefits of consolidating debt are numerous; you can monitor payments more easily, you’re not victim to variable interest rates, and you don’t have multiple lenders contacting you and asking where their money is.
6. It can look good on your credit score
No, really. While a loan might constitute an initial hit to your credit score, the truth is that taking out a loan and making regular, prompt repayments can actually be beneficial to your credit rating. This is because lenders like to see you making repayments; if you’ve never taken out a loan, lenders won’t know how you approach repayments, so they actually have less data to go on. If you know you can make repayments, it might benefit your credit score to take out a loan.
7. You might need help
Sometimes, events happen that are completely beyond our control. When that’s the case, we often don’t have the money squirreled away to help us deal with the consequences of those events in a financial capacity. Taking out a loan can soften the impact of something devastating; funeral costs for a loved one, for example, or paying for an emergency house repair. It’s worth swallowing your pride if you’ve got something urgent to deal with in life, because loans can be a lifesaver.
8. Loans can tide you over between paychecks
Taking out payday loans can be a risky business, but if you utilise them correctly, they can be a great help if you’re between paychecks and need a little help. Remember that loans should never be used as a bandage for long-term financial issues; if you know that the loan is going to exacerbate your financial woes, then it’s not worth taking one out. However, if you find yourself just falling short and you know you’ll be able to make up the deficit on payday, then taking out a loan can be a good idea.
9. You can’t get credit elsewhere
There are many lenders who will provide loans to people who don’t have good credit scores. One of the best reasons to take out a loan is if you’re in need of money, but you aren’t able to get a credit card from lenders thanks to a potentially poor credit score. Loans can be a good option in this circumstance; unfortunately, a lot of society is built around credit, so if you can’t apply successfully for it, then it can feel like you have no recourse. That’s not the case, though; just apply for a poor-credit loan!