Personal loans are an excellent tool for many people. They can be used in so many different ways, and this blog post will cover the ten best ways to use them. We’ll discuss how personal loans work and what they can be used well for.
Ten best ways to use personal loans
- Consolidate debt: personal loans are usually an easier way to pay off your debt than other methods like student loan forgiveness programs or income-based repayment plans.
- Fund college: since so many students rely on help from their parents when it comes time for school, some choose not to go at all rather than risk hurting their family’s financial situation. A t personal loan may be a solution for this. Many state schools offer low-interest private education loans, and these can come in handy during tough times.
- Buy a house: if you’re buying your first home you might not have enough cash on hand to afford the down payment. Personal loans can be used in addition to the funds you have saved these types of loans typically come with lower rates than what’s available through traditional lenders like banks and credit unions, although they may require a higher credit score.
- Buy a car: many people choose to purchase used cars with the help of a personal loan because they don’t have enough cash for a down payment. Since you may be able to borrow up to $25,000 you may be able to purchase a new car – and at lower rates too!
- Pay off higher-interest debts: consolidating high-interest credit card debt by taking out one larger personal loan from your bank or online lender (or using an equity line) could improve your financial situation.
- Invest in other opportunities: some companies may require that applicants prove they have a certain amount of liquid assets before they can even be considered for a job. Personal loans are one way to show that you’re able to handle these sorts of expenses, and often they’ll need to be paid back within just 12 months. But keep in mind, interest payments associated with this may apply.
- Buy new appliances: Some people choose not to upgrade their outdated kitchen or laundry room amenities to buy new appliances because the cost is too high upfront. If it’s something you think will improve your quality of life, taking out a personal loan might help. It could reduce monthly bills by allowing older items like fridges and washers/dryers to get replaced all at once instead of on an item-by-item basis over time.
- Medical expenses: it might not be anyone’s first choice, but if you wind up in the hospital unexpectedly and don’t have health insurance or savings to cover your costs, then a personal loan may help. Since this is typically considered an “unsecured” kind of debt too (meaning no valuable assets are backing the repayment), loans like these may also come with lower interest rates than what traditional lenders offer as well.
- Great resource to start a business: even though many people think that starting their own company will bring them riches overnight, most new entrepreneurs find out quickly how difficult it is – especially without any cash on hand! A personal loan may help you get through those tough times because they’ll likely be repaid within a short period of time.
- To tackle unexpected expenses: let’s face it – emergencies happen all the time everywhere around us, and most people don’t always know what will come through their door next week (or at least not without a crystal ball). A personal loan could even help with more minor expenses like car repairs if you don’t have enough funds on hand.
By: Raymond James
About the Author:
Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals