The fintech industry in Nigeria is on a rapid rise, with customers being able to get loans in a matter of minutes. Today you can get a personal loan through hassle-free online application processes. However, this comes with the downside of people racking up debts. If you’d be getting a personal loan, it is important that you use it wisely. There are 8 smart ways to use a personal loan, which we covered in this article.
What are the 8 Smart Ways to Use a Personal Loan?
Here are the top 8 smart ways to use a personal loan:
1. Debt Consolidation
Arguably the smartest move, debt consolidation is one of the smart ways to use a personal loan. Basically, it is the solution to having multiple loan baggage and outstanding credit bills. With a single personal loan, you can consolidate your outstanding debt at a far lower interest rate.
Also, personal loans offer an option to make only one repayment a month, helping you organize your finances better.
2. To Improve your Credit Score
A good credit score is the most important criterion when you need to borrow money. The score is determined by credit bureaus based on how well youâve borrowed and repaid money in the past. Basically, those who didnât repay on time are classified as high risk, therefore, it is very important that you pay your loan installments before the due dates.
Obtaining a personal loan can help you avoid missing loan installments or payment deadlines that would affect your credit score.
3. For Business investment
Personal loans have several benefits to business owners, especially as there are no restrictions on what you can use the funds for. Certainly, there are times when your business needs multiple expenses or cash inflow. In such conditions, personal loans come in handy. Also, they can be used for personal business/ investment needs.
4. Furthering Your Education
One of the most common uses of personal loans is for investing in education. Education is expensive but important, therefore, a personal loan comes in handy for needs that do not qualify for an education loan. Parents can obtain personal loans to invest in their childrenâs education or short-term courses like special certificates, higher education, vocational courses, etc.
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5. For Travel Arrangements
Personal loans could be used for anything, including travelling purposes. From flight costs to accommodation and even overall vacation, you could obtain personal loans for travel arrangements. Therefore, if you have to go on a trip but do not have enough funds for it, personal loans for travel arrangements are always an option.
6. Home renovation
Of course, you can upgrade and renovate your home to modern standards using a personal loan. Basically, you might want to improve the resale value of the house to sell it at a profit in the future. Home upgrades and maintenance remain one of the smart ways to use a personal loan.
7. Medical Expenses
Health is wealth, and you can agree that we do everything we can to remain in good health. Unfortunately, even with insurance, a single trip to the emergency room for a minor procedure could cost hundreds of thousands. Basically, paying those bills is difficult, especially when you didnât plan for them. In such a situation, personal loans are a very good alternative.
Personal loans could be used to cover medical expenses and emergencies that you normally canât afford.
8. Emergency Expenses
Emergencies can occur anytime, and they are often unannounced, hence the name emergency. One of the good ways to sort them out is taking a personal loan. Since personal loans could be used for any need, they are a good alternative to turn to when there are pressing financial needs to sort out.
Bottom Line
From debt consolidation to medical expenses and improving your credit score, personal loans really come in handy at timely moments. However, be sure to confirm the loan providerâs legitimacy and how favourable their interest rates are.
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