Should I borrow money to tick things off my bucket list?

Should I borrow money to tick things off my bucket list?

Everyone has a dream list of things they’ve always wanted to do but more often than not life gets in the way.

It could be work or family commitments or, in a lot of cases, it could be a lack of money. 

As a general rule we’re often told not to borrow money for non-essentials or things that don’t offer a return on investment, but this doesn’t always have to be the case. While it may be hard to see how something like trekking the Himalayas or getting your dream kitchen may be a financially sound decision in the short term it may not be as unprofitable as you think.

Here are some bucket list items that might actually be worth taking out a personal loan for:

Home renovations

According to ServiceSeeking.com.au, a kitchen overhaul can cost around $6000 while the average bathroom renovation clocks in at more than $8000.

“You can spend a minimum amount on a kitchen and bathroom for a maximum return. Over time, a well-planned renovation could actually double your money,” ServiceSeeking.com.au CEO Oliver Pennington says.

Or before you rent your place out, why not get a small personal loan to spruce it up with new floorboards, a splash of paint, or even a cost-effective garden? Making your home more presentable for prospective tenants could increase the rent, without breaking the bank.

Like Linda, who got a personal loan to give her run-down Queenscliff, Sydney, apartment a re-vamp, “I got a low-rate loan of 10.99 percent [from the Commonwealth Bank] – cheaper than my credit card – to lay new floorboards down, install an air-conditioner, and add a fresh coat of paint to inject life into the place,” Linda says.

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“By spending to finance your renovationg around $11,000, including interest, the rent increased by 30 percent while the property increased from $400,000 to about $460,000.”

Owning your own car

Have you always wanted your own set of wheels but haven’t been able to justify it? It may be time consider the fact that travelling for work can be a great way to earn more. The suburb you live in, or the ones easily accessible by public transport, may not be where the most money is and borrowing a bit of cash to get yourself moving can be a great way to overcome this challenge.

Branching out to work in areas that you previously wouldn’t have considered can mean more income and employment opportunities that provide financial rewards in years to come. Of course, in this scenario we’re referring to a vehicle to get you from A to B as opposed to the Ferrari of your dreams, which may be a bit harder to justify.  

A life changing holiday

Stressful jobs make it hard to head off on a tropical getaway, but considering a well-earned break may give you a fresh outlook, keeping you in your job longer, it might just be worth it. It’s no secret that Aussie workers are increasingly over-worked and stressed out, so to avoid running yourself down a holiday to somewhere you’ve always wanted to go could be a good way to revitalise.

While the long term financial return might not seem as obvious as some investments there’s definitely something to be said for looking after your biggest asset: yourself. 

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Learn more about personal loans

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

Are there low doc personal loans?

Self-employed borrowers may be eligible for low doc personal loans, which require less documentation in their application process than many other personal loan options.

It’s important to remember that though low doc personal loans may require less paperwork, you may need to provide additional security, or pay a higher interest rate.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

Can single mothers get personal loans online?

Many lenders offer online applications for personal loans, which can be convenient for borrowers who have busy lives. If you’re not confident your personal loan application will be approved, you may want to consider contacting the lender by email, live chat, phone, or by visiting a branch, to discuss your situation before applying.