When Is Getting Personal Financing A Good Idea?
Imagine this, you’re a working professional. You make a good living as a doctor/engineer/lawyer/accountant, and are able to meet your monthly commitments on a regular basis. In fact, you might even be able to save for a new car or house.
One day, someone offers you personal financing. Naturally, your first thought is you don’t need it. But taking up personal financing might make sense if you take it for the right reasons.
Just because you can pay for something doesn’t always mean that you should. You don’t need to risk using up your own savings when personal financing can help you accomplish your plans and still allow you to keep your financial safety net in place.
For example, personal financing can be useful if you know how to use it in these circumstances.
Financing a big purchase
The most common reason for picking up a personal financing is to spread out the costs of large purchases. The first thing you would probably think of is for home renovations, but it applies to anything you don’t want to pay for in a lump sum.
Why would you do this if you can afford to pay for it up front?
Well, it may be that this is an unexpected purchase and you’re trying to avoid dipping into your emergency fund. Alternatively, it could be that you would need to save for some time in order to afford this purchase – but doing it now is more beneficial to your future (like doing renovations on a house you intend to rent out).
There are other situations that require you to come up with a big sum of money upfront like unexpected health problems, urgent home repairs or your family’s education needs. Taking up personal financing to pay for these major events will help you manage your cash flow and still take care of the additional financial responsibilities.
Build your own business
Everyone dreams of being their own boss, even professionals who may have dreams of opening their own practice or running a business on their own terms. That said, businesses need money to start – and there’s no guarantee that it will succeed.
In that case, you may not want to risk your own life’s savings on the venture. Not when you can manage the risks by taking advantage of a personal financing to spread out the costs.
This not only gives you more flexibility on managing your new financial responsibilities, but it also gives you an extra safety net in the event that something unforeseen happens and you need to fall back on your savings.
In other words, save your emergency savings for actual emergencies. Consider using personal financing to manage your business risks.
Consolidate your debt payments
Taking on financing to pay off other debts can be a good option, especially if you can use it to reduce your monthly payments. Debt consolidation is a valuable tool to improve your monthly cash flow, and you should take advantage of it.
Here’s an example of using personal financing to clear credit card debt over two years:
The table above shows how taking a personal loan to clear credit card debt over a period of time can save you money in the long run. If you had to rack up large credit card bills in the past due to emergency expenses, debt consolidation can help you bridge the gap in your finances without dipping into your savings.
You will need to find the sweet spot between your current monthly commitments and the potential repayments from consolidating your debts. Naturally, it all depends on the financing terms for which you qualify. This is also dependent on your history of paying off financings, i.e. your credit score.
Improve your credit score
You might not think that you need personal financing, but you will almost certainly need to take out housing or car financing at some point in the future. In this situation, a good credit score is helpful for getting better interest rates and opens the door to more financing options.
When this happens, it is helpful to have a record of personal financing in your recent credit history. It helps prop up your credit score; letting banks know that you are a reliable customer who is capable of meeting monthly installment payments without delays.
You don’t even need to commit to a big financing amount in order to accomplish this. A small financing that is within your budget to manage the repayment schedule is more than enough to maintain your credit rating and smoothen your road for future big-ticket purchases.
Bank Islam Has A Financing Option Just For Professionals
Bank Islam has a special personal financing program with professionals like you in mind. It offers financing limits up to RM300,000 – which is higher than those offered by similar products on the market. It also offers a long tenure of up to 10 years.
Professionals in the following fields can apply:
- Safety Officers
- Quantity Surveyors
Benefit from these features specially for professionals:
- Competitive financing rates
- High financing limit
- Takaful coverage
- No guarantor or collateral requirements
With no processing charges and no hidden fees, the Bank Islam Personal Financing For Professional Program is a convenient choice for busy professionals.
Regardless whether you’re looking to renovate your home, reduce your existing monthly debt repayments, or even just boost your credit score to prepare for your future plans, this financing option can help you in managing your finances better.
If you’re interested, visit the Bank Islam Personal Financing For Professional Program website to find out more and apply. You can also immediately apply for your desired financing from Bank Islam’s website itself. There’s no need to leave the comfort and safety of your home.
Just because your finances are stable now, doesn’t mean that you shouldn’t improve them.