Personal loans are flexible financial tools that can help you make large purchases or get you through a financial shortfall.
Let's examine the ways in which we can use personal loans to achieve our goals in an affordable way.
Personal loans are paid back in monthly installments ranging from one to six years. It can take longer to repay some personal loans but, this depends on your financial circumstances and, how often you make payments.
It may be unnecessary to take out a personal loan for lavish spending but, they can be very beneficial for things such as home upgrades and repairs, to purchase a vehicle or consolidate debt.
#1) To consolidate your debt
Debt consolidation is one of the most common reasons given for taking out a personal loan. Having to deal with different loans with varying interests and pay dates is a nightmare. For those who are not financially savvy, this is a disaster waiting to happen.
When applying for a debt consolidation loan, you are grouping all your debt into one loan that you can pay off in a time frame that is comfortable for you.
The advantage of using a personal loan to pay off credit card debt is the lower interest rate. With the rates lowered, the interest rates are reduced as well as the time it takes to pay it off. When you consolidate, you pay off your credit cards with a clear end in sight.
#2) Payday loan alternative
Financial hardships can push you to want to take out a payday loan to help you get by in the interim. However, they can leave you worse off than before given their high interest rates. So rather consider a personal loan.
Even though a payday loan may be easier to get, the risks are not worth it. Many lenders can charge interest that is over 400%. On the other hand, a personal loan is typically a lot more straightforward and, the rates are lower.
#3) Financing home improvements
Personal loans can be a good option when wanting to remodel your home. Whether you want to renovate the inside or the outside of your house or add something to your existing structure, you can do it.
If you don’t have cash on hand, a personal loan is a great help and can make your home improvement journey a success.
#4) Money for moving
Moving a short distance won’t require you to take out a personal loan but, if it’s a long-distance move, maybe for a new job, costs can skyrocket. In such a situation, applying for a personal loan will work in your favour.
A personal loan can help move your household belongings from one place to the other or even buy furniture for your new home.
Always keep in mind where you are financially and, ensure your income will enable you to pay off your loan comfortably. Considering this will reduce the stress of paying off a loan and starting a new job or, moving to a new place.
#5) Emergency expenses
Many times, people forget to mention funeral expenses as one of the reasons some apply for a personal loan. Though it’s an uncomfortable thing to consider, we all know how expensive a funeral can be. With the help of a personal loan, the stress of planning the funeral is lessened.
Medical expenses are another big reason that people approach lenders for a personal loan. Common medical expenses could be things like dental work, cosmetic surgery and fertility treatments. All these things can be a reason to get a loan online.
Household disasters can happen at any moment. If your washing machine breaks down and you don’t have cash on hand to pay for repairs, a personal loan can bring relief.
Other bigger purchases like an entertainment centre or computer games can cost more than what you have in your savings account and, it may be nice to have such luxury items. That being said, it's more beneficial to use your loan for items in the house that are essential such as household appliances.
A personal loan gives you the option to buy appliances immediately instead of having to wait for months by saving for a single item. Even though you may have loan fees, in the long run, you will save time and money.
Buying a car, boat or RV
Personal loans come in handy when you want to buy those really large items such as a car or a boat or, any vehicle. Some examples of larger purchases can be tiny homes, snowmobiles, or even horses and equipment. With a personal loan, you can buy a vehicle even if it's preowned.
Paying for a wedding
When you hear talk of wedding loans, often people are referring to personal loans. In some instances, it’s best to take out the loan before getting married. The loan can be used for big items, like securing the venue, or the dress or other expensive items such as flowers or catering.
You could even pay for wedding rings with a personal loan - the possibilities are endless. Remember, there are always options and a personal loan can help you have the wedding of your dreams.
A dream vacation
Always wanted to go on a nice vacation but had to opt for the less expensive weekend break? With a personal loan, taking that much needed and deserved vacation is finally possible.
Use it to pay for your honeymoon or to go backpacking after you graduate. You could see the world and make your travel dreams come true with a personal loan.
Just as a loan can pay for your wedding, appliances and cars, it can also help you spoil yourself now and then. A personal loan can finance your dreams in an affordable way.
What to keep in mind
A personal loan can be used for anything. There are no limits. Even though you have different reasons for wanting to take out a personal loan, you have to pay it back no matter the circumstances you find yourself in after.
When taking out a personal loan, don’t forget that you're borrowing money that will have to be paid back with interest. Personal loans are great for consolidating your debts and making major purchases, however, you must be responsible with how you manage your finances, especially when you have debt.