There may come a time in your life when you find yourself in need of extra money. While you have many options, you’ll first want to consider the benefits of a personal loan.
Here are some reasons why a personal loan could be the perfect solution:
- It’s unsecured, meaning no collateral is required
- You can choose from a variety of terms
- Interest rates are competitive when compared to secured loans
Note: if you have a strong credit history and high credit score, your chance of approval is much greater. Lenders base their decision largely on these factors, since they’re not taking any collateral in exchange for lending you the money.
You can use a personal loan for almost anything, but here are five times it makes the most sense:
1. Debt Consolidation
As you review your debt and learn more about consolidation, it may become obvious that a personal loan is the best solution.
With this, you can borrow the money you need to payoff some or all of your debts (such as credit cards and money you owe family and friends).
While your amount of debt remains the same, you now only have one payment. This can save you money on interest, and also make it easier to manage your debt.
2. Home Improvement Project
Are you hoping to remodel your kitchen? Is your home in desperate need of new siding and windows? Are you looking to transform your unfinished basement into the space of your dreams?
Home improvement projects can be expensive, so you need to plan accordingly. With a personal loan, you can borrow exactly how much money you require to complete the job.
3. Medical Bills
Even if you have health insurance, it’s still possible you could get stuck with medical debt.
If this happens, the first thing you should do is tally up all your debt. From there, contact your medical providers to determine if there’s anything you can do to reduce the debt (such as paying a lump sum).
Once you know what you owe, you can take out a personal loan to payoff the entire balance. Even though you still owe the money, you’ve consolidated the debt and improved your ability to stay on track with your payments.
4. Once in a Lifetime Trip
You should always think twice before you borrow money to take a trip. However, if you’re faced with a once in a lifetime opportunity, such as a trip with your family to a tropical destination, you may want to take the leap.
If you have enough cash to pay for the trip, so be it. If you don’t, a personal loan is often the best choice. This is typically better than a credit card, since you can borrow a set amount of money at a lower interest rate.
5. A Child’s Wedding
Let’s face it: there aren’t many occasions more exciting than a child’s wedding.
With the average cost of a wedding checking in at roughly $33,000, you may need a personal loan to cover all the expenses.
Can you think of any other times it makes sense to apply for a personal loan?