What kinds of things are personal loans used for? Find out now!
Personal loans are relatively simple, usually involving up-front cash in exchange for a fixed loan amount with a fixed interest rate and fixed monthly payments. Question is, what kinds of reasons would someone have for getting a personal loan? Here are 5.
1. Consolidate debt.
One of the potential advantages of a personal loan is that you can combine debts to different creditors into one, simple, easy-to-manage loan.
2. Pay off credit card debt.
If you have credit card debt, it may make sense to get a personal loan to pay it off. Among other reasons, you may benefit from having a fixed interest rate and payment schedule, rather than a revolving credit line with variable rates.
3. Finance a home renovation.
If you’re in need of a home renovation and don’t want to take out a home equity line of credit or don’t have enough cash saved up, a personal loan can be an attractive way to get the renovation done now and pay the debt back later.
4. Deal with unexpected debt, like a medical bill.
Sometimes, life throws you expensive curveballs, like an unexpected medical bill. A personal loan can be a great way to weather those kinds of events if you don’t have the savings or enough insurance to cover them.
5. Find a lower interest rate.
Sometimes, personal loans end up offering a lower interest rate than the one you’re paying, whether you currently have a different personal loan or other type of debt.
Personal loans can be a great way to finance existing debt or new expenses. Just make sure you research lenders you’re considering and carefully review loan terms before signing on the dotted line.
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What You Need to Know:
There are various types of credit scores, and lenders use a variety of different types of credit scores to make lending decisions. The credit score you receive is based on the VantageScore 3.0 model and may not be the credit score model used by your lender.
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