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Things You Should Consider Before Applying For a Personal Loan

Things You Should Consider Before Applying For a Personal Loan Blog
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From taking heavy pay cuts to outright dismissal from places of employment, thanks to the effects of the pandemic, many Malaysians have suddenly found themselves in need of a source of funds to cater to rising bills. Because of this, one option people end up considering is whether to take a personal loan or not. Like all things, taking a personal loan has its pros and cons. On the pro side, you can get this sort of fund from most financial institutions without having to leave any form of collateral. On the flip side, if you aren’t careful and take this type of loan for the wrong reasons, you may find yourself in a very uncomfortable position.

Why?

Because right now, personal loans are Malaysia’s leading cause of bankruptcy! Considering this, let’s look at specific motivations that may lead people to get a personal loan and their possible outcomes.

Getting a Personal Loan To Buy Something Special

Taking a trip to Hawaii to unwind from the pandemic’s stress isn’t a bad idea, nor is getting that special someone a surprise package from The Straits Finery. You don’t want to use a personal loan to fund such expenditures! You should only take on any debt if it’s unavoidable. So, consider saving towards such goals if you want to treat yourself and a loved one. It will take longer, but you’re sure to avoid crippling and unnecessary debt.

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Getting a Personal Loan To Pursue An Investment Opportunity

Applying for a loan to cash in on investment opportunities is one of those ideas that sound great and practical until you take the time to think things through thoughtfully. All you need to realize this is one look at the highly unpredictable volatility of the investment world. For example, in Nov of 2021, 1 Bitcoin was worth $68 991. As of May 2022, 1 Bitcoin is only $28 305, less than half its value six months before! Moreover, this cryptocurrency’s value will keep falling unless an unexpected global event happens. What would happen to someone who took a personal loan to invest in Bitcoin in November today? Your guess is as good as ours!

Getting a Personal Loan To Pay Off Multiple Credit Card Debts

It isn’t a bad idea – as long as the interest rate of the personal loan is lower than that of the credit card(s) debt you’re paying. However, this isn’t always a given as some personal loans have been known to carry heavy interest rates that easily rival credit cards!

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Bottom Line

Taking a personal loan can help your financial situation considerably, but only if you do it for the right reasons and read the fine print carefully. Also, no matter what you do, never take loans from a loan shark, as such dealings are illegal and can turn deadly fast!

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