What can you use a personal loan for?

As Kiwis look for different ways to achieve their financial goals, personal loans are growing in popularity. In fact, Mike Pero data shows a dramatic increase in personal lending in the last 12 months.

But what are so many Kiwis using personal loans for? Here are three of the most popular uses.

Debt consolidation

Debt consolidation is by far the most popular reason people apply for a personal loan and accounts for more than half of the personal loans written by Mike Pero Mortgage Brokers.

The reason this option is so popular is simple – consolidating can help borrowers stay on top of their debts.

Sometimes in life, our financial commitments can really stack up. When there are store cards, credit cards, hire purchases and other loans all taking payments from your bank account at different times, and charging different interest rates, it can be hard to keep up.

Unfortunately, when faced with this situation, many people think the best thing to do is just keep making their payments in the hope they’ll come out on the other side. Sadly that’s not always the case.

That’s where consolidating debts comes in – by consolidating all debts together in the one loan, with one interest rate and one regular payment, it’s easier to keep on top of your finances.

Many personal loans also have lower interest rates than other credit facilities like credit cards or hire purchase agreements, so you could pay off your debts sooner by consolidating.

Renovations

Many homeowners have been put off by the idea of selling and buying in the current market, so they are instead turning to renovate their homes.

Most personal loans range from as low as $1,000 all the way up to $50,000, which means whether you just want to touch up a few walls or carry out much larger renovations, you can customise the loan to suit your needs and renovation requirements.

Unsecured car loans

Some personal loans can also be used to purchase a car.

While it may seem easier to use the car finance offered by your local dealer, it’s a good idea to first shop around and check out the different finance options available including whether a personal loan is a better option. Being approved for a personal loan even before setting foot in the car lot, can give a buyer an advantage when it comes time to haggle on price. Having a pre-set approved limit can also help car purchasers stick to pre-agreed budgets.

To properly compare the pros and cons of taking out a personal loan over a car loan, it’s a good idea to speak with a professional financial adviser.

Mike Pero Mortgage Brokers can help you to find the loan product that best suits your needs.

What should you do if you’re considering a personal loan?

If you are thinking about taking out a personal loan and want to know how much the repayments might be, use our helpful loan repayment calculator here.

Or, if you think a personal loan could be right for you, reach out to a Mike Pero Mortgage Broker to talk through your options. You can find your nearest adviser here.