A personal loan is a sum of money that you borrow from a lending institution, and then pay back slowly over time. The Australian Prudential and Regulation Authority reported that last year the total amount of money lent in personal loans equalled around $58.6 billion. Find out some of the reasons you might want to take a personal loan out.

Fast approval process

Compared to other loans like a home or car loan, a lot less paperwork is required. While you’ll still need to provide basic information like personal identification and details about your income, there are much fewer forms to fill out. And because the application process is faster, so is approval. You can generally expect to get your loan approved within a day or two. If you’ve got a large expense you need to get together quickly, a personal loan may be the answer.

Flexibility

While most other loans specify what you have to spend the money you borrow on, this isn’t the case with a personal loan. You have the freedom to put the sum towards anything you like. The flexibility of the loan also extends to how much you borrow. Whether a small sum or a large sum, a lender can give you the amount with a personal loan. This is not the same as a credit card, where you aren’t able to borrow a large amount on a single occasion.

It’s less expensive than a credit card in the long run

The interest rates on personal loans tend to be a lot cheaper than credit card interest rates. What that means is that in the long term you’ll pay less in repayments than you would with a credit card.

If you’ve got a big, one-off expense like a holiday or much-needed house renovation, a personal loan is the smart choice. You can get the cash you need fast and not get stuck further in debt with high interest charges as you would if you’d gone with your credit card.