8 Reasons to Use a Personal Loan
Wednesday, September 9, 2020
Read Time: 4 mins
Did you know a personal loan can be used for many reasons? It could be an excellent resource to help you finance unexpected or planned life events and situations. A personal loan allows us to borrow money at a fixed interest rate and repay it within a specific time period. There are two common types of personal loans - unsecured and secured. However, most personal loans are unsecured, which means there’s no collateral required, and it can be used for almost anything.
If you’re wondering, here are a few ways you could use a personal loan.
1. Debt consolidation.
Are you looking for a better way to manage multiple credit cards and other debt? A personal loan may be the solution to consolidate your debt. Debt consolidation allows you to combine your debt so you’ll have one monthly payment at a fixed-rate instead of making multiple payments at various interest rates. The interest rate is usually lower on a personal loan, and you could save money. Taking this approach to pay off debt works best when you limit your credit card usage so that you don’t accumulate more debt.
2. Medical bills.
An unexpected visit to the emergency room or doctor’s office could cost you thousands of dollars. If you’re in a position where you can’t afford to pay these medical expenses, a personal loan may be an excellent option to consider. A personal loan allows you to pay off your medical bills over a period of time.
3. Home improvement project.
It’s not if, but when it happens – a broken dishwasher, a leaking water pipe, or a running toilet. Maybe it’s time to upgrade your kitchen cabinets. A personal loan could be a good option for a much-needed home repair or upgrade. You can take out a home equity loan or home equity line of credit, but with these types of loans, you have to use your home as collateral and potentially pay additional costs to obtain the loan. However, with a personal loan, you don’t have to use collateral to take out the loan.
4. Car repair.
If your car breaks down and you don’t have the extra money to pay the repair cost, a personal loan may be the answer, especially if this is your only means of transportation. Also, you can use a personal loan to purchase a car. The advantage of using a personal loan to finance a car is it doesn’t require a down payment, unlike most auto loans.
5. Wedding cost.
According to The Knot, the average cost of a wedding in South Carolina is $30,600. This could seem overwhelming, especially if you haven’t saved up for your big day. However, with a personal loan, you could possibly have the wedding of your dreams. First, create a budget and decide what you want for your wedding. You may wish to have the best of the best, but be realistic about how much you can afford to borrow and repay.
6. School supply.
This school year is quite different from previous years because of the pandemic. The pandemic has affected how schools operate and how children will learn this school year. Whether your child is going to the classroom or virtual learning, they will need school supplies. If they’re going back to school in person, they will need notebooks, pens, clothes, and backpacks. If they attend school virtually, they may need a computer, desk, and chair. The cost of school supplies can quickly add up. A personal loan could be used to purchase school supplies.
7. Funeral cost.
The death of a loved one can be one of the most challenging events you face in life. Planning a funeral can be extremely stressful and costly, especially if your loved one didn’t have life insurance or funds saved to cover funeral expenses. The average cost of a traditional funeral ranges between $7,000 and $12,000. You could use a personal loan to help cover funeral costs if you’re short on cash.
8. Holiday shopping.
The holiday season is fast approaching, and now is a good time to start thinking about your holiday expenses. Make a list of your holiday expenses, including gifts and decorations. Create a budget to determine how much you can afford. If you don’t have money saved for holiday spending, you can borrow the funds from a personal loan.
If you’re in a situation where you need extra money to pay for an unforeseen circumstance or consolidate debt, a personal loan may be a good option. However, before you decide to borrow the money, carefully evaluate your budget to make sure you can afford to pay back the loan and make monthly payments on time.