Personal loans are borrowed money or cash used for purchases, emergency expenses, debt consolidation, and much more. These loans are paid back in monthly installments over typically one to five years, but it can take longer depending on your circumstances and how diligent you are with making payments.
How Personal Loans Work?
Most personal loans in Cameroon have fixed interest rates, which means that your payments will stay the same every month. Personal loans are also typically unsecured, meaning no collateral is behind the loan. If you do not qualify for an unsecured personal loan, you may have to use collateral to be approved. You can also ask a friend or family member to co-sign on your personal loan to aid you in getting approved.
While it’s always important to carefully consider your financial situation before taking on a loan, sometimes a personal loan is the best way to finance a large purchase or project that you can’t afford upfront. Here are the top nine reasons to get a personal loan.
Reasons to Get Personal Loans in Cameroon
Here are the top eight reasons to get a personal loan in Cameroon:
- Emergency expenses.
- Moving costs.
- Wedding expenses.
- Home remodeling.
- Appliance purchases.
- Alternative to a payday loan.
- Vehicle financing.
- Vacation costs.
1. Emergency expenses.
If you have a sudden emergency, like paying for a loved one’s funeral, using a personal loan could be a low-cost option. The median cost of a funeral is 1,000,000 XAF, which can be difficult for many families to afford.
Surprise medical bills are another common reason to take out a personal loan, especially if your doctor requires payment in full. Standard medical treatments that may need a personal loan include dental work, chronic illnesses like diabetes and hypertension, fertility treatments, and other procedures that can cost 1,500,000 XAF or more.
Who this benefits most: Those in need of unexpected or emergency funds.
Takeaway: Because they can be disbursed quickly, personal loans are an excellent way to cover an emergency or unexpected expense.
2. Moving costs
The average cost of a local move is about 50,000 XAF, while a long-distance move costs 200,000 XAF. If you do not have that kind of cash on hand, you may need a personal loan to pay for moving expenses.
Personal loan funds can help you move your household belongings from one place to another, purchase new furniture for your new residence, transport your vehicle across the country and cover any additional expenses. Using a personal loan for moving costs can also help you stay afloat if you’re moving somewhere without a job. This way, you can avoid raiding your savings or emergency fund.
Who this benefits most: Those embarking on a long-distance move in Cameroon and anticipating thousands of FCFA in expenses.
Takeaway: If you can’t immediately afford all of the expenses associated with a long-distance move, a personal loan can help you cover those costs.
3. Wedding Expenses
The average cost of a wedding in Cameroon is about 1,500,000 XAF. For couples who do not have that kind of cash, a personal loan can allow them to cover the costs now and repay them later.
A wedding loan can be used for big-ticket items like the venue and bride’s dress and more minor expenses like flowers, photography, the cake, and a wedding coordinator.
You can also consider paying for the engagement ring with a personal loan. Depending on the ring you’re getting, engagement rings can easily cost several months’ worth of your salary. If you do not want to deplete your savings account, consider a personal loan to help make your engagement and wedding precisely the way you always dreamed it to be.
Who this benefits most: Those looking to finance their wedding expenses.
4. Alternative to a payday loan.
If you need money for an emergency, using a personal loan instead of a payday loan may save you hundreds in interest charges. Most banks in Cameroon may charge an average APR for a payday loan of 300 percent, while the maximum interest rate on a personal loan in Cameroon is typically 30 percent.
Payday loans have short repayment terms, usually between two and eight weeks. This quick turnaround time often makes it difficult for borrowers to repay the loan by the due date. Borrowers are typically forced to renew the loan instead, causing the accrued interest to be added to the principal. This increases the total interest owed.
Personal loans have longer-term lengths and will generally cost the borrower much less in total interest.
Who this benefits most: Borrowers with less-than-stellar credit.
Takeaway: Personal loans are cheaper and safer than payday loans.
5. Home renovation
Homeowners in Cameroon can use a personal loan to upgrade their houses or complete necessary repairs, like fixing the plumbing or redoing the electrical wiring.
A personal loan is a good fit for people who do not have equity in their home or do not want to get a home equity line of credit or home equity loan. Unlike home equity products, personal loans often don’t require you to use your home as collateral. In that way, they are less risky.
Who this benefits most: Those looking to finance a small to mid-sized home improvement project or upgrade.
Takeaway: A personal loan can help you fund a home improvement project if you don’t have equity in your home and don’t want to borrow a secured loan.
Suggested: Cost of Building a House in Cameroon?
6. Appliance purchases.
Household disasters can strike unexpectedly. If you suddenly need to buy a new fridge or a cooker but do not have the funds, a personal loan can provide relief. Other significant purchases, such as an entertainment center or computers, can cost more than what you have in your checking or savings account.
Personal loans allow you to purchase major household appliances and electronics immediately, rather than wait months to save up for them. Though you will have to pay interest and potentially upfront fees, a personal loan can save you time and money in the long run.
Who this benefits: Those looking to make a more significant household purchase now to save time and money in the future.
Takeaway: A personal loan can help you get new appliances as soon as you need them.
Read Also: Top Banks in Cameroon.
7. Vehicle Financing
A personal loan is one way to cover the cost of a car, boat, RV, or bus. It is also one way to pay for a vehicle if you are not directly buying it from the company.
For example, if you buy a used car from another consumer, a personal loan will allow you to purchase the vehicle without emptying your savings account.
Who this benefits most: People looking to purchase a new vehicle.
Takeaway: Using a personal loan is better than depleting your savings or emergency funds when paying for more considerable expenses.
Suggested: Car Loans in Cameroon Online.
8. Vacation costs.
Your average vacation might not cost enough to necessitate taking out a personal loan, but what about a honeymoon or a luxury cruise? Whether you’ve just graduated and want to go on a trip or you’re celebrating an anniversary, personal loans can help you finance your dream vacation.
Who this benefits most: Those paying for a lavish or more extensive vacation.
Takeaway: If you’re comfortable paying off your vacation for several years, a personal loan can help you get to your dream destination.
Should I get a Personal loan in Cameroon?
A personal loan may be a good option if you need a quick influx of cash to pay for necessary expenses.
Of course, you should always weigh the benefits with the drawbacks. After all, taking on a personal loan means taking on debt, and you will need to be prepared to make payments on that debt for a few years. If you don’t have the monthly budget for principal payments plus interest, reconsider the amount you need to borrow or how you borrow.
How to Apply and Get a personal loan in Cameroon?
If you want a personal loan, you should compare multiple lenders in Cameroon to find the lowest interest rate. Start with your current bank and then apply with online lenders, local credit unions, and other banks. Most lenders will allow you to get prequalified, seeing your possible interest rates and terms before you apply, all without a hard inquiry on your credit report. Along with interest rates, you should also compare loan terms and fees.
Once you find a lender you like, you’ll submit a complete application with your loan details, personal information, and income verification documents. This will result in a hard inquiry on your credit report. For most lenders, this part of the process is quick; as long as you submit all relevant documents, you may be able to get your funds in a matter of days.
Conclusion
At the end of the day, a personal loan can be used for almost anything — even beyond the options listed here.
And though there are many different reasons to take out a personal loan, remember that no matter the circumstance, the loan must be paid back eventually. You should always utilize this financial resource responsibly.