Yes, you have read that right. Unsecured loans help you avoid unbridled debt after Christmas. More or less, individuals tap financial facilities like credit cards and overdrafts to meet their needs. However, such options affect your financial performance in the long term.
Read ahead if you don’t want to see yourself in the pool of unpaid liabilities after the occasion. The blog may help you understand how unsecured loans may help you manage one. Individuals with low income and existing liabilities may benefit. It may help you celebrate the occasion without worrying about the debt.
A Glimpse of Unsecured Loans
Unsecured loans are financial facilities that do not require collateral. One can qualify without putting precious belongings at risk. It is an ideal option to tackle short and long-term financial needs. You can use it for home repair, decorating lawns, purchasing gifts, etc. The maximum payout on the loan is -25000. The approval and the amount you get depend on your affordability.
Individuals with good credit ratings, well-balanced debts, and consistent income get approval. You can repay the dues within 12 months- 5 years. The interest rates stay slightly competitive compared to secured loans. Thus, borrow responsibly to avoid paying unnecessary interest.
Ways unsecured loans reduce debt burden
According to NatWest’s research of 2000 customers,
“One-fifth of customers plan to increase their holiday budget this year.” It reveals how much Britons value exploration, even in the time of financial distress.
Individuals cannot skip planning holidays even with strict finances. As Chief Executive of NatWest, Richard Lim says,
“Holidays have become critical, almost non-negotiable for households. They are turning to short-haul travels and avoiding peak travel times.”
Individuals will cut back elsewhere than on trips. However, planning a trip requires sufficient cash surplus. With limited income and Christmas expenses, you may struggle. Here is how unsecured loans may help you land dream destinations. Yes, you can grab tickets without spending much. Read further to know more:
1) Get a suitable amount to book the trip
An unsecured loan helps you book the ticket to the most anticipated destination. You may want to surprise your kids with a Disney land trip. However, one regrets missing it this time due to low financial capability. However, you don’t have to. Instead, check the best unsecured loans. It eliminates the deal to save until another year.
Instead, get instant cash to book the tickets. The experts analyse your affordability. Individuals with valid citizenship, income and sound finances get better rates. Thus, you can book tickets affordably using one. It is better than relying on other modes of financing the trip. Sometimes, the mediator may cost a lot.
2) A cheaper alternative to a credit card
Most individuals use credit cards to settle utility bill payments with a credit card. It is out of habit or to get great credit points. According to Money.co.uk, “around 64% of adults in the UK hold at least 1 credit card”. Thus, the ease of usage and the credit benefits make one seek credit cards. However, the habit may prove costly.
It helps you spend around 40% more than ideally you should. Shocked? Let’s know the difference with an example. For example- you take 10k pound loans to renovate a bathroom for guests. Here is how much interest you pay when using a credit card. It is in comparison to the unsecured loan. Let’s calculate using the trusted MoneySavingExpert ( Martin Lewis) calculator.
| Parameters | Paying bills using a credit card | Paying bills using an unsecured loan |
| Amount borrowed | 10000 | 10000 |
| Interest rates | 26.28 %(annual) | 7% (annual) |
| Total interest costs | 5229 | 1494 |
So, you can see the difference between using credit cards and unsecured loans for debt payments. What’s the point of paying more just to clear small debts? Unsecured personal loans grant you the facility to choose the amount and repayment term. Here are other benefits of using one :
It provides more control over finances. Halting payments with credit cards is impossible. So, make sound financial choices this Christmas. Prioritise money saving by getting the best loan.
3) It helps create a budget and stick to one
Usually, a loan agreement requires you to pay the dues according to a schedule. This means the borrower must save a particular amount from repaying the loan as an instalment. The money to pay may vary according to the purpose and loan term.
It thus helps ensure disciplined and responsible payments and expenses. You can set direct debits to pay the dues. It prevents one from missing the payment. Moreover, it ensures a sound credit status. Consistent payments help you avoid penalties and late payments. Thus, it keeps you from paying extra.
4) Counter expensive repairs responsibly
One cannot predict the repairs. It happens just automatically. Thus, you may not have a cash surplus to counter that. One panics and ultimately ends up worsening the situation. Alternatively, you spend without calculating the average costs of the repair. It leads to investing more than you need to. Unsecured loans help you counter such things.
Well, sometimes, it is better to ask experts than neighbours about the costs. It is especially beneficial if you lack cash to counter it. The experts may help you evaluate the actual costs of the thing.
Moreover, you may get a well-educated, unsecured loan that meets your needs. You never get more than it may take you to tackle the issue. You can accordingly explore the best contractors and save money. The experts calculate the average cost of the repair and the gravity of the issue. Thus, it eliminates the fear of spending more than required.
5) Helps counter tax liabilities
You must file your taxes by 31st January 2025. Christmas-related expense proves the greatest obstacle. You might have planned everything. However, sometimes, it is just not enough. It is thus ideal to reference back to the previous year’s spending. You can factor in economic growth and inflation to create a Christmas budget. However, don’t worry if you cannot remember it.
You would not lose on your taxation liabilities. You can use unsecured loans to settle one. It is okay to surpass the budget sometimes. However, missing tax payments is not advisable. It may instead lead to penalties. Who would like to pay more than one is entitled to? Unsecured loans prevent you from doing that. It is indeed a saviour!
Bottom line
These are some ways an unsecured loan helps avoid Christmas financial liabilities. It reduces your debt and promotes savings. However, you should be careful while using one. Identify your requirements and the impact of the loan. Will it better the situation? If yes, then you can try unsecured personal loans. These are ideal for any cash mishap or long-term needs. With Christmas knocking on the doors, you can try one.
Williams Adams is the Senior Content Writer and Loan Advisor at Loansevents. He is passionate about finance writing and has written thousands of blogs for the top platforms worldwide. In more than 13 years of experience, he has worked with leading lending firms in the UK providing various loans. At Loansevents, Williams does the major task of writing researched-full blogs on multiple loans and financial concepts. He has done MBA in Finance in the UK to back his finance skills.
