Personal loans can be used in nearly any situation. Some lenders could ask about your plans regarding the money, while others will only want to make sure you are able to pay it back. But unlike specific loans such as house mortgages and auto loans, personal loans often aren’t secured by collateral. They can also come with lower interest rates and faster payout times, making them a good solution for a number of different situations in life. Here are just some of the circumstances under which you might want to take out a personal loan:
The time might come to send your child off to college for the first time, or you may even decide to further your own education. While higher education is incredibly important and even a necessity for certain careers, the cost of tuition is increasing all around the globe, making it quite difficult for the average individual to meet these demanding expenses without any financial assistance. In that instance, a personal loan can be of great help in alleviating some common financial stresses. You can use it to fund tuition, living expenses, and all other costs associated with higher education.
Even though many home renovation projects are done purely for aesthetic reasons, other situations could be quite pressing. For example, you might notice leaks, experience structural damage, or even be the victim of a burglary. Repairing or renovating your home after such situations is not only a costly task, but also a serious one that requires urgent action. Taking out a personal loan is helpful in these cases as well. It will allow you to make any necessary repairs to your home quickly and affordably, without having to empty your savings for urgent home improvements.
Some situations in life are entirely unpredictable. For instance, you might need to pay for medical bills and vet expenses, unexpected car repairs, relocation costs, or other types of emergencies. In these cases, taking out a personal loan is the best course of action. As long as you find a reputable personal loan lender that can take care of your unique needs, you could expect a loan decision and payout in a matter of minutes, all through an online application. This speed, reliability, and convenience is what makes personal loans so helpful in times of need.
Major life events
From weddings and anniversaries to honeymoons and birthday parties, there are a number of important life events you might want to celebrate. Sometimes these celebrations end up costing more than you thought, sometimes the number of guests unexpectedly rises, or you might simply realise that paying for your celebrations with a loan is significantly less expensive than using a credit card. No matter the situation, a personal loan is a great solution for financing any life event that requires funding quickly, as long as you don’t go into debt throwing an unnecessarily large celebration.
Credit card debt
If you owe a significant sum on one or two credit cards with particularly high interest rates, a personal loan could allow you to pay them off easily while saving some money in the process. At the moment, average credit card interest rates exceed 19%, and average personal loan rates remain at just over 9%. This large difference enables you to pay down the balance much more quickly and lower your total as well. A single debt will also be simpler to track and pay off compared to several different ones.
Bad credit score
If you take out a personal loan and pay it off on time, you might also be able to improve your credit score. This is especially true if you have missed a number of payments in the past concerning other debts. When you have various types of loans and you demonstrate that you can control them responsibly, that is thought to be quite beneficial for your credit score. However, this could also be a dangerous solution for some, as it’s important to pay everything back on time, including all other bills, and maintain a lower credit utilisation ratio.
Evidently, there are a number of situations in life when a personal loan could be quite helpful. Just make sure not to take out a loan when the circumstances aren’t right, or when you simply can’t afford it.