Guest Post from Loanfolk
Home improvements are an essential part of maintaining and enhancing the value of your home. Whether you’re trying to amp up your living room to make the house look better, adding new tiles to the bathroom, creating space for a new kid’s room, or redesigning the entire space, home improvements are important for a property owner.
However, these improvements can be rather expensive. That’s why a personal loan is a quick and easy way to cover the costs. While it’s convenient, is taking a personal loan smart for you? Let’s go deeper and weigh the pros and cons.
Understanding Personal Loans
We all know that personal loans are easier to get. Their convenience emerges from the fact that these loans are often unsecured, i.e. there is no requirement for a collateral.
While a home loan or car loan can be secured against a collateral, the credit worthiness of your personal loan is assessed against a good credit score, your income, and the ratio of your debts to your income.
Personal loans have a fixed duration and charge a higher interest rate as compared to a secured loan. Their tenure for repayment is also quicker than other loans.
While loans for a larger sum of money are often given by a bank, the loans given for personal use are issued by both banks and a lot of personal lenders.
Weighing the Options: Personal Loan Edition
The accessibility of personal loans makes them a lucrative option for many people looking to redesign or make some other kinds of home improvements. Even a small project like wall art can be easy with a fast personal loan.
However, before deciding to take a personal loan, let’s take a look at the benefits and things you’ll need to consider to make an informed choice.
Interest Rates
It’s important to look at the interest rates of personal loans. Usually, personal loan lenders charge higher interest rates as compared to other types of loans. If you have a good credit score and the capacity to pay the interest on time, then a personal loan could be the answer you’re looking for.
In this case, it’s smart to compare personal loans offered by different lenders based on their interest rates, repayment duration, your credit score, and any other factors that you consider important.
Investment Property
If you’re using a personal loan to improve an investment property, you could offset the time to recoup the investment by increasing the rent.
Adding attractive features to your property like better flooring, landscaping, kitchens, and bathrooms will help make the property more appealing to potential buyers and tenants.
In a nutshell, upgrading the services and amenities at your property will help you to justify higher rentals and/or get higher returns on your investment in a comparatively short span of time.
Flexibility
The best part about securing a personal loan is its flexibility of usage. The ambiguity of the word personal means that you can use the money secured, however you like.
Whether you spend it on beautifying your home through painting the walls or use the money to furnish a new room, it can be used however you like.
Just make sure you use it carefully.
Speed
If you have urgent home improvement needs, and you’re looking for a way to make it happen without too much hassle, a personal loan is your best bet.
The faster approval process and easier transaction makes it a great option to get things done quickly and efficiently.
Loan Amount
The loan amount offered by personal loan lenders is usually small compared to home or car loans. The unsecured nature of these loans makes them risky for lenders, hence the smaller amount.
However, this also helps the one who’s taking the loan to pay it back easily.
Plus, if you’re looking to make a few quick changes to improve your home, like adding new furniture for a minimal look, or changing the color scheme of your interiors, a small loan amount is ideal to ensure that you don’t overspend on unnecessary things.
Potential Benefits of Personal Loan
While there are certain things that you need to look out for, it’s hard to deny the benefits that personal loans offer.
Here’s a few key points:
No Collateral
Personal loans are the safest way to get a loan without risking your assets like home, car, land, etc. Even if you default on the repayment, your assets will be protected.
Quick Access to Funds
Quick funds through personal loan help you get started on your home improvement project faster. With a simple approval process, it makes it easier for you to complete any renovations and refurbishment projects faster.
Fixed Payments
The interest rates for personal loans, while high, are fixed along with their duration. The predictability offered by these fixed payments gives the loanee enough time to budget their expenses accordingly.
Things To Consider When Taking a Personal Loan
Even with all the benefits that it offers, here are a few things you should think about before applying for a personal loan for home improvements.
Repayment Terms
The repayment cycle for personal loans comes with higher interest rates but shorter durations for repayment. If this is something you feel you can afford and are comfortable with, then a personal loan could work for you.
Impact on Credit Score
Just like any other loan, a personal loan has an impact on your credit score. By increasing your debt, a personal loan impacts your creditworthiness and faltering in the payment is more than likely to harm your credit score.
If you’re looking to apply for a personal loan, your credit score needs to be good. If you’re thinking about how to check and improve your credit score, it's worth checking apps like Mint, CreditWise or other similar apps to give you an idea of the loan you're eligible for. And when you're exploring other options, consider alternative lending apps.
Late Fees
Some lenders charge an extra amount if you falter in your repayment. This extra cost is usually high and comes at an extra interest rate that doesn't pay towards your actual amount.
Be careful when taking a personal loan. Continuously paying your loan amount late or faltering to pay it can cause extra costs that might take a bite out of your planned budget.
To Sum Up:
Weighing your options when deciding to take a personal loan for home improvements is important. As a property owner, there are different benefits as well as risks associated with using a personal loan for improving a home.
By weighing the pros and cons of your unique situation, you can make an informed decision about not only taking a home loan to enhance the presence of your overall living space but also if it's a smart choice financially.
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“Michael Helwig was top-notch, very professional and responsive to my needs. He allowed me time to explore ideas and try out a variety of combinations until we found the perfect fit. Michael provided detailed information and offered beautiful ideas to make my dream living room become a reality. The furniture he sourced has totally transformed my living room space. Everyone that has seen my new living room has one word, WOW! A special thank you to Michael for a wonderful experience.”
“Michael was very knowledgeable and guided us, with great patience and good humor, through the process of designing our dining room and helping us find the perfect sleeper sofa. He offered really helpful advice when we asked questions - which was often - but at no time did we ever feel pushed. He helped me when I felt like I couldn’t make one more decision. When my new furniture finally arrived I realized everything down to the pillows was perfect. I couldn’t be happier!”
The opinions and views expressed in any guest blog post do not necessarily reflect those of Michael Helwig Interiors or its Principal, Michael Helwig. Michael Helwig Interiors, and Michael Helwig, do not have any affiliations with any products or services mentioned in the article or linked to therein. Guest Authors may have affiliations to products mentioned or linked to in their articles or bios.
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