When Does a Personal Loan Make Sense?

A personal loan isn’t the answer to all your financial questions, but there are times when it’s the perfect solution.

If you’re considering a personal loan, it’s imperative to better understand the finer details, terms and conditions, and which lender is best for you and your financial needs.

Let’s examine three situations in which a personal loan makes sense:

1. You Don’t Want Another Credit Card

There is no denying the benefits of a credit card. If you have good or excellent credit, you’ll find it easy to apply for and secure a new card within a matter of minutes. 

However, there are times when a credit card just doesn’t work. For example, if you’re interested in borrowing a specific amount of money for a fixed period of time, a credit card isn’t the answer.

This is where a personal loan can help. Not only can you specify how much money you want to borrow – typically between $5,000 and $50,000 – but you can also choose your term, which generally falls between 12 and 84 months.

With a fixed amount, fixed term, and fixed interest rate, you know exactly how much you’ll pay each month – and for how long.

2. You Have a Large Expense

Maybe you want to renovate your kitchen or bathroom. Or maybe you need to pay for your child’s wedding. Or perhaps you have the opportunity to take a once in a lifetime trip. 

If you have a large expense staring you in the face, it doesn’t always make sense to spend all (or some) of your cash. Just the same, you may not even have enough cash on hand.

Once you know how much money you require, you can then apply for a personal loan to meet your needs. This takes a lot of guesswork out of the equation, while also putting your mind at ease. 

3. You Have Debt to Consolidate

Debt has a way of accumulating as the months turn to years. Soon enough, you could find yourself buried in many types of debt, ranging from credit cards to car loans to money you owe friends and family.

With a personal loan, you can bring all your debt under one roof. This has many benefits:

  • Gives you confidence that you’re on the right track
  • Easier to organize and manage
  • Save money on interest charges

If you’re finding it difficult to manage your debt load, see if a personal loan can take some of the stress out of your financial life. 

Final Thoughts

Since no two people are in the exact same situation, only you know if a personal loan makes sense.

If it does, make note of how much money you need to borrow, how you’ll use it, and which lender can best suit your needs.

Once you receive an approval, review the terms and conditions and make a final decision on whether now’s the time to sign on the dotted line.