Too much debt is a bad thing , however there are times when you may need to take on more debt. The question is often raised , when should I consider taking a personal loan? As a rule of thumb you should only contemplate a personal loan in emergency situations. These are a few of the scenarios when it makes financial sense to take out a personal loan:

You are faced with unexpected medical expenses and your medical cover won’t cover all the cost. You should then look at taking out a personal loan to cover these emergency medical cost. Your health is too important to take chances and if your are short of cash then take a personal loan , but never take chances with your health.

Your are faced with rising educational expenses and just can’t pay these out of your monthly income. Taking out a personal loan in this case would be a viable option. Education is an investment that will pay off in the long run - don’t be afraid to finance education through a personal loan.

Your car needs repairs and you just don’t have enough resources to to cover the costs. Without transport you cannot function - unfortunately we don’t have reliable public transport in South Africa and a running vehicle is a necessity. Vehicle repairs can be quite steep especially when the warranty has expired - not many people can fund these costs out of their monthly budget and still make ends meet. Often taking out a personal loan is the only option available.

You have a number of small debts that you are paying off every month some of them at exorbitant rates of interest. If you can secure a personal loan at a lower cost it makes sense to consolidate all you debt via a personal loan. You will then only have one payment to make and the total payment will be lower than your previous repayments.

Life often presents you with emergency situations and often the only way you can deal with the problem is by applying for a personal loan. These can range from family emergencies or helping a friend in need.

These are some of the instances when it makes sense to apply for a personal loan to help you through a difficult situation. Never take out a personal loan to cover luxuries , day to day living expenses , deposit for a vehicle or to finance a vehicle.  If you need vehicle finance you should rather look at some of the tailor made packages provided by banks and vehicle finance companies.

When you do take out a personal loan , always try and settle the debt sooner especially if there are no early settlement penalties.