Personal loans can be termed installment loans since these loans can be paid back in monthly installments for a period agreed on by both the lender and the loanee. One can decide to acquire a loan from a bank or a broker such as Money Smart. Money Smart gives the best personal installment rates. When you successfully apply for a loan via Money Smart you get to receive different types of offers from different companies. 2021 can be noted to be a year whereby most personal loans have been acquired. Personal loans have been surging in 2021 for various reasons but the following are the most common reasons why;
- The pandemic
- House renovations
- Debt consolidation
- Vehicle purchases
- Emergency expenses.
The Pandemic
The fact that no one saw the pandemic hitting us this hard can be a major reason for the surge in the number of people taking up personal loans. The pandemic has led to massive job losses, salary reduction causing a huge financial crisis. Many people turned to personal loans to survive since they have very low-interest rates. Personal loans have helped them pay school fees and pay off other loans. Personal loans are a major hit also because it is an installment loan type.
House renovations
House renovations have been among the top reasons for people taking installment loans. Since the Covid 19 pandemic struck the world, people have been traveling less, and they have to stay in their homes more; others went on to work from home. The house renovation makes the home feel better and gives them more happiness as some homes were in bad conditions or were not conducive for one to work from home. Most people also took personal loans because, during the pandemic, most of them were spending more time at home. Personal loans are a good option for many people who want to remodel or renovate their homes since they don’t force you to use your home as collateral.
Debt consolidation
Debt consolidation is one of the most common reasons why people take up personal loans. During the pandemic, most people have been incurring losses, others have lost their jobs, and they had picked up loans before all this transpired, these loans need to be paid, and this is where people begin to opt for the personal loan. People opt for this so that they can pay off another loan or consolidate multiple debts into a single debt by taking this up which they will pay up as installment loans. This is very advantageous since personal loans have a lower interest rate. The fact that personal loans have lower rates, means that the amount of interest you pay and the time you pay off this debt is reduced. This is very beneficial for people with high-interest debts.
Vehicle purchase
A personal loan is a good way to cover the cost of purchasing a car, boat, private jet, or even an RV. If one needs to buy a car, they can get a personal loan instead of exhausting their savings account. When you pick up the personal loan to purchase your vehicle, the vehicle won’t be used as collateral. Personal loans also don’t restrict one on the type of car one can purchase, unlike the alternative that is an auto loan which requires a down payment, while personal loans don’t. Many people have opted to buy their cars to avoid traveling in public vehicles because of the high risk of contracting Covid-19.
Emergency expenses
This includes unexpected medical bills that come out of the blues or sudden death that has a cost. This has been experienced during the pandemic where people find themselves with bills of loved ones that passed on due to Covid-19 and also left huge medical bills which are had to pay off, and one would opt for a personal loan. Paying for one’s funeral using an emergency cash loan will be a low-cost option for many. Funerals are expensive, and this might be hard for many families to afford if the death is sudden.
Another emergency expense can be auto repairs. You can never predict your auto repairs. When your car breaks down, and you need a huge lump of cash to repair it, a personal loan is a good alternative since one saves on the interest, unlike other loans.
Conclusion
Taking an installment loan is a better choice than using all of your savings or emergency money when you want to cater to large expenses. Personal loans can be used for anything you want, but you need to consider if the reason behind taking the loan is necessary. Many people have taken up these loans in 2021, but it is important to note that the loan has to be paid back. The pandemic’s effects have been the major reason why many people are picking up personal loans.
