Refurnishing can be expensive, the cost of furniture has increased and unless you want to buy those make-it-yourself products, you need to have a good amount of money available if you plan to refurnish your home. Most people resort to credit cards to finance such projects; yet, a personal loan can be a lot cheaper and can help you not to exceed yourself in your expenses.
Moreover, there are always delivery charges and if the piece of furniture is big enough not to fit through the door, you will need some guys to introduce it through windows or dismantle it and put it together again. All of this costs a lot of money and you need to add it to the overall costs of the refurnish project.
Why Personal Loans?
There are many reasons why a personal loan is the best choice for you. For starters, since personal loans come in fixed amounts, this will force you to budget your finance needs and know beforehand how much money it will cost you to refurnish your home. Thus, you will avoid going on board a project that you are not sure how much it will cost.
Secondly, the interest rate charged for personal loans is a lot higher that the rate charged for credit card financing. Even unsecured personal loans carry lower rates than credit cards. If you are lucky enough to have equity on your home, you can request a home equity loan and you will be able to get finance at a much lower rate.
Finally, fixed payments will help you budget your debt repayment and thus divide among the months a project that might be quite expensive. With credit cards, when you make big purchases, the minimum balance payment tends to escalate to high amounts that may not be easily afforded.
Different Types of Loans
Personal loans come in many forms. There are secured and unsecured personal loans, fixed rate and variable rate personal loans, personal loans for people with bad credit, pre-approved personal loans, pre-qualified personal loans, etc. All share the same concept: They are loans meant for personal purposes that may carry high amounts but never as high as home loans.
The presence or absence of collateral determines whether a personal loan is secured or unsecured. Collateral is a security (an asset) that guarantees repayment of the loan thus reducing the risk involved in the financial transaction for the lender. That’s the reason why secured personal loans carry such low interest rates compared with unsecured personal loans.
As regards the interest rate, a fixed rate remains the same over the whole life of the loan. This implies that the monthly payments of the loan will also remain the same which makes them an excellent tool for those not familiar with the lending market and not familiar with budgeting variable rate debts.
Variable rate personal loans change the interest rate every three months. The interest rate can rise, lower or stay the same according to market conditions. Thus, the monthly payments will vary consequently. However, at the same time, variable interest rates are initially lower than fixed rates (mainly because the risk for the lender is also reduced by the possibility to alter the interest rate).
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
Cheap mortgage?
By: tlaidlaw | 22-07-2008
I want a mortgage - where are they still cheap?
Preapproval
By: Lynne | 21-07-2008
I am a contractural loan processor. Currently I have no clients but my daughter and her friend want to be pre-qualified for a mortgage. Any suggestions as to who I can give the referral to?
Fixed Rate Deals?
By: tlaidlaw | 21-07-2008
How do I get as good a deal when I come out of my fixed period?
Mortgage
By: tina | 21-07-2008
what to do? I purchased my home in 06 for $744M and have an interest only mortgage for $500M. Given the collapse on the real estate market, the FMV of the home is unknown. I have tried to refinance and even though have a FI CO score of 780, I do not qualify for a mortgage. The interest only mortgage is not due until 5/11. Even though the mortgage is interest only, I do make principal payments. Should I wait until the loan matures, with the hope that the housing market would be better?
What is the proper investment ratio (stocks, bonds ...
By: Tip | 21-07-2008
What is the proper investment ratio (stocks, bonds, cash, etc) for a 72 year old retiree that wants to earn but protect the assets in a $1.5 million portfolio?
Bad credit
By: CreditPoor | 21-07-2008
how can i get charge offs off my credit report?
Q&A Powered by:
More from Amanda Hash
Ran Out of Cash? Finance yourself With a Personal Loan
By: Amanda Hash | 12/07/2008 | Loans
Either for unexpected expenses or due to lack of proper budgeting, many people run out of cash and find themselves unable to make ends meet. Obviously, the best thing to do would be to count with a savings account to cope with such situations but for the majority of people who do not, a personal loan is a much better source of finance than using a credit card.
Debt Consolidation is not Always the Right Solution
By: Amanda Hash | 12/07/2008 | Debt Consolidation
Debt consolidation can save you from debt problems, can improve your credit score and save you thousands of dollars. However, not all debt can be consolidated and given that there are different consolidation programs you should check if the one you chose or the one that the agent chose for you is really to your advantage.
Are There Really Unsecured Bad Credit Loans?
By: Amanda Hash | 12/07/2008 | Loans
Bad credit loans are advertised everywhere and those who have bad credit build hope that they can get finance despite their credit difficulties. However, most bad credit applicants seek unsecured loans and most bad credit loans are secured loans. So, many people with bad credit wonder if those promotions offering unsecured bad credit loans are real or just scams.
24 Hs. Loans: When Time is Essential
By: Amanda Hash | 12/07/2008 | Loans
Sometimes you need money and you do not have time for long credit verifications and you can not wait till your payday. Such situations happen all the time and if you do not have a savings account with enough money to cope with them, you will need financing but personal loans take some time to get approved for. Fortunately there are 24 Hs. Unsecured loans that can be approved overnight.
Get a Waiver on Your Student Debt and Become Debt Free
By: Amanda Hash | 07/05/2008 | Finance
It is possible to obtain waivers on your student debt payments if you meet certain requirements.
Debt Consolidation: Handle With Care
By: Amanda Hash | 07/05/2008 | Finance
There are two debt consolidation methods we will discuss in this article.
Co-signing and Bankruptcy Loans: an Alternative to Collateral
By: Amanda Hash | 07/05/2008 | Finance
A co-signer can provide the required guarantee for the lender to approve your loan.
Looking for the Reasons for Your Low Credit Score?
By: Amanda Hash | 07/05/2008 | Finance
These five factors will help you understand how to improve your credit.
Finance 
