Pros and Cons of Getting a Personal Loan | Cigno Loans

Pros and Cons of Personal Loans

A personal loan can sometimes be the ideal solution for covering bills, affording a holiday, or making a purchase that’s currently just out of reach. However, as with most things in life, there are both pros and cons of personal loans.

And as with most decisions in life, you’ll typically make the right call when you’ve done the appropriate research to fully inform yourself. To help you do just that, we’ve put together a list of the pros and cons of getting a personal loan.

Personal Loan Advantages and Disadvantages

Pro: They’re flexible.

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A home loan can help you buy a home. A car loan gets you some new wheels. But you can use a personal loan for pretty much anything you need or want. This means it’s suitable for just about any circumstances and can come in handy for any unexpected expenses or essential purchases.

Con: It’s only a temporary fix.

Personal loans aren’t going to get you out of debt. If used wisely, they can be a good short-term solution between paydays. But you need to make sure you never borrow more than you need or more than you can afford to pay back. Otherwise, your personal loan could lead into a cycle of debt.

Pro: Approval and transfer are quick.

The cash from a personal loan can land in your account in days or even hours – great for when your bills or purchases can’t wait. With Cigno, you’ll usually enjoy same-day approval and receive your funds either that day or the next morning.

Con: Interest rates are reasonably high.

Compared to other types of loans, personal loans tend to carry a higher interest rate. Before committing, make sure you understand what rate to expect and do the maths to check that your repayments will be within your budget.

Pro: Bad credit isn’t necessarily an obstacle.

Getting a mortgage or other large loan can be difficult if you’ve got a couple of strikes against your name. Personal loans are typically more forgiving for people with blemished credit histories. Just keep in mind that poor credit can still restrict your options and might lead to a higher interest rate (depending on the lender).

Con: They need to be paid back quickly.

Personal loans are quick – and so are their repayments. You’ll have a limited window to repay the loan before additional fees come into play, so plan your finances accordingly to avoid paying extra.

Pro: No assets are needed.

Many personal loans can be unsecured, which means you don’t need to put your home or vehicle up as collateral.

 

Weighing Up the Pros and Cons of Personal Loans

Weighing Up Pros and Cons | Cigno Loans

A loan isn’t something to apply for on impulse. It’s an important financial decision you should only make after understanding the pros and cons of getting a personal loan – as well as considering available alternatives.

Compare the personal loan advantages and disadvantages listed above, and think about how relevant each one is to your current situation. This will help you decide if a personal loan is the most suitable step forward for your finances.

If you’ve determined that a short-term cash loan is the appropriate solution for you, you can apply today.

Micro Loans for Centrelink Customers Explained

Are you a Centrelink customer looking to launch your own business? Frustrated by getting knocked back by banks because you have poor credit or because you’re receiving benefits? A micro loan might be the solution you’re looking for. The person-to-person nature of these financial solutions means micro loans for Centrelink customers are feasible where more mainstream loans might not be.

 

What is a micro loan?

Micro loans are person-to-person (P2P) investments typically used to fund a small business. Microlending is often used to fund entrepreneurs in developing countries where other loans are difficult to come by. However, they are also useful for small-business owners in developed countries who have poor credit history or are otherwise unable to get approved for finance with a bank or credit union. This is what makes them suitable for entrepreneurs who are on Centrelink.

 

How does a micro loan work?

People seeking a micro loan can reach investors via websites such as SocietyOne, MoneyPlace, Harmoney, and Wisr, which act as administrators for microlending arrangements. By doing this, you could get your business needs funded by either a single lender or a group of investors (each lending a portion of your total micro loan). You then pay back the loan to your investor(s) over time with interest, just like a regular loan.

 

Features and Benefits of Micro Loans

The main benefit of a micro loan is that you can potentially access a lender (or multiple lenders) regardless of your financial circumstances (e.g. bad credit, no credit history, or receiving Centrelink). The downside to this is that micro loans typically come with higher interest rates to account for the high risk that lenders are taking on board.

Microlending also comes with these advantages:

  • Quick and simple application process
  • Fewer complications and documentation
  • Technology makes it possible to access investors all over the world.

 

Why a Small Business Might Need a Micro Loan

Aside from launching in the first place, an existing small-business owner may need finance at various stages while running and growing their business. Microlending can help you overcome these obstacles if enough lenders trust you and are willing to invest in your business development.

Some scenarios where your small business might need additional financing via a micro loan include:

  • Expanding or renovating your premises
  • Growing your online presence (e.g. website, eCommerce, social media, email marketing)
  • Investing in new equipment
  • Hiring new staff and expanding your team
  • Diversifying your business with a new product or service.

 

How to Apply for a Micro Loan

Seeking a micro loan is similar in some ways to using a crowdfunding platform like Kickstarter. You apply for the loan through a site like SocietyOne or MoneyPlace, and they will attempt to match you with investors who will lend you the money you need. You may need to describe your business and explain how the money will be used in order to persuade potential lenders.

A micro loan isn’t always the most suitable option. If you need quick money for a small business upgrade, you may want to instead consider a cash loan of up to $1,000 with Cigno.

Is Online Shopping Sending You Broke?

In the current climate, online shopping is more prevalent than ever, as lockdowns and coronavirus fears force many Australians to turn to the internet for more of their needs and wants.

Make no mistake though – online shopping was well on the rise before COVID-19 existed. According to this Australia Post report, 2018 saw the number of online purchases in Australia increase by more than 20%. Almost ¾ of Aussie households shopped online during 2018, and eCommerce spending accounted for 10% of all retail sales.

With this trend on the rise, it’s essential for you to be aware of the tactics businesses use to encourage you to spend more money when shopping online (e.g. free shipping for orders over $X, discount codes for return buyers).

Let’s explore the links between coronavirus and panic buying, with some tips for controlling your online shopping during the pandemic.

 

Panic Buying and Coronavirus

People often respond irrationally or in an exaggerated way when faced with a perceived emergency. We saw this in how medical supplies (e.g. hand sanitiser and face masks) and essentials such as toilet paper were rapidly snapped up during the early stages of the pandemic.

According to this piece from Big Commerce, this type of panic buying is driven by 3 fundamental psychological needs:

  • The need to feel like you have some control during uncertain times
  • The need to feel like you’re doing something to help your family
  • The need to feel like you’re a savvy shopper making smart choices.

This was all combined with the instinct to over-prepare and a dash of crowd mentality, which is why so many people turned to panic buying – even people who initially scoffed at the idea.

 

How to Control Your Online Shopping During the Coronavirus

Most people have moved beyond panic-buying essentials at this point. But that doesn’t mean we’re all making wise decisions when it comes to our shopping. As this ABC article explores, plenty of people are making some unique – and sometimes unaffordable – online purchases in response to the pandemic.

Whether driven by boredom or aspirational thoughts (this is my chance to become the master pianist I always dreamt of being), many of us are making purchases we typically wouldn’t consider. And we’re not necessarily thinking about our budget as we do so.

It doesn’t help that Buy Now Pay Later services like Afterpay are giving us an inflated sense of how much we can afford to spend on non-essentials.

Here are some quick tips to help you control your online spending during the pandemic.

Ask yourself: Why am I shopping?

Do you need that fifth jigsaw puzzle? Or do you just want it? Of course, during troubling times like these, it’s not a bad idea to indulge in some fun items that can fill our time and keep our minds occupied. But if your finances are running thin, it’s worthwhile putting a magnifying lens over your online purchases to determine whether each item you’re buying is truly needed.

Set a budget

The easiest budget to blow is a budget you haven’t even set. Examine your income (including any changes due to reduced hours, etc.) and set aside a reasonable amount each fortnight or month for discretionary spending. If an item you’re tempted to buy doesn’t fit within that budget, don’t buy it.

Do your research

If you’re determined to buy a certain something to help you get through the pandemic, make sure you shop around. You may only save a couple of dollars by buying from a different website, but those few dollars can really add up if you research your options and compare prices every time you shop online.

Unsubscribe from websites

How many times have you bought something you saw in a marketing email and then had buyer’s remorse? Limit your temptations by scrolling straight to the “unsubscribe” link whenever you receive promotional emails.

Be wary of tactics that make you spend more

A 10% discount for making another purchase sounds nice. But unless you were already planning to buy something else from that company, you’ll just be spending more money on things you don’t need. Similarly, “free shipping for orders over $X” is only a real treat if you already have that amount in your cart. Otherwise, you might find yourself spending an extra $30 on something you don’t really want just to save $10 on postage.

It’s important to see offers like these for what they really are – marketing efforts to get you to increase your spending. Only take advantage of them if it truly benefits you to do so.

With a strict budget and some smart choices, you can set yourself up to be a sensible online shopper during the coronavirus – without running your savings account into the ground. But if you need a small financial boost to buy some essentials, consider if a quick cash loan might be the right solution for you.