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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