Story sponsored by Savvy.
We've all heard the old saying that there are only three things in life that are guaranteed, birth, death and taxes. But there is another one we seldom talk about.
At some point in life, all of us are going to be in a situation where we have an unexpected expense arise and we're going to need to find a way to pay for it.
For example, you might be minding your own business one day when suddenly your excited daughter calls you to say, "Guess what? We're engaged! He got down on one knee, he asked me to marry him and I said yes!"
It's an exciting moment but once the catharsis wears off... you now have a wedding to pay for and it's not going to be cheap.
Or, maybe that boat which is your pride and joy, the one that provides you with your much needed weekend escape has finally packed it in and you need money to replace it.
Or, it could be that once in a lifetime overseas trip you've always wanted to take, that last truly magical experience as family, before the kids get too much older.
In some cases though, it's nothing that extravagant, sometimes you've just got a few too many bills to pay and you need a little bit of extra cash to get you through the year.
For all of these situations, a personal loan is often the best option. Depending on your credit profile you can loan as much or as little as you need and - if you're savvy - you can achieve a good interest rate with minimal fees and charges.
The most important thing to remember when applying for any type finance is this: whatever loan you undertake needs to meet your needs... NOT the other way around.
The quickest way to get yourself into financial hardship is to take out a loan without reading the fine print. One of the best examples of this is payday lending.
Ever since the royal commission into banking resulted in tighter regulations for the big four, there has been a sharp increase in payday lending.
According to a recent report from the ABC, between April 2016 and February of this year, 3 million additional payday loans - totalling $1.85 billion - had been taken out by roughly 1.6 million Australian households.
Payday lending can be highly predatory and is not advisable. While they might look simple and easy, they are ladened with hidden fees and charges.
The lenders can charge an establishment fee of up to 20 per cent of the total loan; they can also charge monthly servicing fees of up to four per cent; and if you default on the loan or fail to pay it back on time, you can be charged an array of dishonour fees. These add up very quickly.
In fact, the Consumer Action Law Centre (CALC) have warned that the accumulated charges on a payday loan far outweigh those of credit cards.
According to figures recently published by news.com.au, the group says the interest repayments on a $1200 loan with a credit card would be about $92 over a nine month period. Repayments on the same amount through a payday lender would cost you nearly an extra $700 over the same period.
When you take out a personal loan, there aren't hidden fees and charges. If you opt for a fixed interest rate, you know - upfront - exactly how much you're going to be up for in repayments.
All you need to do is set up your direct debit and that weekly, fortnightly or monthly fee is taken directly out of your account. It just becomes part of your budget.
Like all loans, personal loans are dependent upon your individual credit profile so the interest rates you can achieve are based on the risk associated with the lending.
If you have a lot of debts or multiple loans from payday lenders, this is going to make it harder for you moving forward, whether it is in achieving a good interest rate or applying for a future line of credit.
If you have got yourself into trouble with multiple high interest debts or credit cards, personal loans can be a good way to get out from under them.
By consolidating your debts with a personal loan, you can turn your multiple bills that are all racking up individual interest, dishonour fees and administrative charges into one, simple repayment.
By doing this you can achieve a comparatively lower interest rate. You also typically have upto five years to pay it back. This can relieve a lot of stress, anxiety and save you money in the long run.
As I said before: you need to get your debt working for you. There isn't a one size fits all approach to personal finances but if you shop around and be savvy, you'll always find a solution.