Personal loans are borrowed money that can be used for large purchases, alleviate financial hardships, or even just supplement for an expensive occurrence. These loans are paid back in monthly installments over the course of typically two to six years, but it can take longer depending on your circumstances and how diligent you are with making payments. Although it may seem frivolous to take out a personal loan for, well, personal reasons, it can be hugely beneficial in certain instances and when used and paid back correctly.
Debt consolidation is one of the most common rationales given for taking out a personal loan. Imagine carrying multiple loans or outstanding credit cards that all have varying interest rates and balances due. That’s a recipe for financial trouble, and it’s also where personal loans can step in to help.
When you apply for a loan and use it for debt consolidation, you’re combining all of those outstanding balances into one monthly payment. This grouping of debt makes it easier to work out a timeframe to pay off your balances without getting overwhelmed.
One of the best advantages of using a personal loan to pay off your credit cards is the lower interest rates. With lower rates, you can reduce the amount of interest you pay and the amount of time it takes to pay off the debt. Consolidation allows you to pay off credit cards in finite terms with a clear end date in sight.
Financial Backups During Hardships
If you’re facing financial hardships, you may be tempted to take out a payday loan to help you get by in the interim. However, payday loans are often predatory and can leave you much worse off than before. Therefore, before pulling the trigger on a deal with a payday lender, consider a personal loan instead.
Though payday loans may be easy to get, they carry extreme risks if you can’t pay back the amount owed in the time agreed upon. Some payday lenders charge interest rates over 400%. Personal loans like joustoluotot, for example, on the other hand, are typically more straightforward and incur much lower APR rates.
Financing House Remodeling
A personal loan can be a great option to pay for home remodeling, according to Kristin Shuff, senior vice president of marketing at LightStream, an online lending division of SunTrust Bank.
Whether you want to put on a new roof, install solar panels, remodel your kitchen or add a swimming pool, hot tub, landscaping or hardscaping, if you don’t currently have the cash on hand, a personal loan can be a big help when it comes to home improvements.
Furthermore, a personal loan is a good fit for people who don’t have equity in their home or don’t want to get a home equity line of credit or HELOC, Shuff says.
Some people forget to talk about funeral expenses when discussing the main reasons for personal loans. Though it may be an area that is uncomfortable to consider, personal loans can be a helpful resource in the event of a family member’s death. In short, funerals are expensive. Between the burial plot, casket, funeral home services, and other factors, costs can quickly add up to thousands of dollars.
Common medical treatments that may require the use of a personal loan include dental work, cosmetic surgery, fertility treatments and other procedures that can cost $5,000 or more. Ancillary expenses like medical travel, parking, medications and aftercare also can be effectively financed by a personal loan.…