How to Pay Off Debt and Manage Your Personal Finance

Personal finance is a term used to describe financial management practices used by an individual in his personal life. The financial management practices could be saving strategies, investing strategies, income-generating strategies, financial risk management strategies, budgeting, spending, etc.

Managing Your Personal Finance When You Have a Debt

I have never taken a bank loan, however, I have borrowed from friends a couple of times. When I borrowed from friends, the amount was not very big, the repayment time was short and I was not charged interest. The loan was actually a help from a friend. If I needed a big amount, I would definitely choose to go to a bank

Normally, I am not in a habit of getting a loan from a friend or lending o a friend. When money is involved the relationship will sour. I don't want the money to come between friends. Having said that I have lent money to some of my friends and also burrowed from a few friends. When I burrowed and lent, we had a clear agreement on the terms of repayment.

Last time I borrowed from a friend it was for investing in the share. I used the loan money to buy shares and paid the loan after a couple of months by selling the shares for a higher profit. When I invested in my business, I had enough savings so I did not require a loan. But I might get a loan when I decide to buy a house.

Different Types of Personal Loans For Improving Personal Finance

A loan is basically a debt that needs to be paid in time; however, getting a personal loan can help you in your personal finances.

Here are different types of personal loans that you can use to improve your finances

A House loan is one of the common types of personal loan (also called a mortgage). You can get a loan to buy a house. You can even get a loan to buy land. You can borrow to invest in commercial property (commercial building or commercial land), as well as personal house or personal land (with an aim to build a house later. Whether you buy a house for personal use or borrow to invest in a commercial property, in both cases you can actually benefit.

Education loan: If you are a student or a parent, getting an education loan greatly helps because you will be able to get a good education without having to worry about finances. When you graduate from a prestigious university, your worth will greatly improve.

Device loan: You can get a loan to buy a device, you can use your device to make money.

Getting a Loan and Loan Repayment

You can get a loan from various sources from banks and private lenders to finance companies, even insurance companies. When you are burrowing from insurance companies, you are actually borrowing your own money. They will use your insurance premiums as collateral.

I have never tried any loan apps. I do not know if it is possible to get a loan from these apps. But in my home country, some banks have made it easy to apply for a loan through mobile apps. All you have to do is provide information like your income, credit score, collateral, etc. The bank will contact you based on the information provided.

When you get a loan, you need to pay it back, it is not free money. Interestingly, there are fraudulent people around us, they take loans and avoid paying them. But they cannot run because the bank will get them anyhow.

Your loan terms cannot be changed once you borrowed money (at least that's what happens in the banks in my home country). You cannot change the one-year loan term to 5 years term, you cannot change a $2000 loan to $3000 unless you have applied for an overdraft. When you get a loan, you should think to consider all the options.

First Published on Trendri, in the author's name