5 Great Reasons for a Personal Loan
Whether faced with an emergency or you need to borrow, discover the benefits of a credit product that suits your needs and great reasons for a personal loan.
We live in one of the strongest economies in the world. Yet, despite that strength, wages haven’t kept up and about 40% of Americans struggle to make ends meet.
Fortunately, there are financial tools that people can use to help them meet their monthly obligations or dig out of debt. Personal loans have easily passed credit cards as a preferred form of debt.
What are 5 outstanding reasons to take out a personal loan?
Keep reading to find out.
Why Are Personal Loans Popular?
Personal loans have moved past credit cards to become the fastest growing type of debt. To understand why let’s look at what personal loans are.
Personal loans are loans that you can take out for any reason. When you take out an auto loan or a home loan, it’s for those specific purposes. You borrow a certain amount of money at an interest rate determined by your lender and you make monthly installment payments for the term of the loan.
The terms of the loan can be anywhere from 6-60 months, depending on the amount you borrow. The great thing about personal loans is that they are available to people with good credit and bad credit.
Personal loans offer a lot more flexibility and stability than other forms of debt because you can take them out for a number of reasons, and you know what the monthly payments will be every month.
5 Reasons for a Personal Loan
Would you like to improve your financial situation? In that case, a personal loan may be a smart move for you. Let’s look at some of the more common reasons for a personal loan.
1. Consolidate Credit Card Debt
The most common reason why so many people turn to personal loans is to consolidate credit card debt. The average person has about three credit cards, which means three separate debt payments.
Depending on your interest rate, you can be paying much more in interest over the long haul than what you actually paid for.
What a personal loan can do for you is you can pay off those credit cards completely and just have one monthly payment. The monthly payment is likely to be lower than what you’re paying out every month.
The interest rate is likely to be lower than credit card debt, too. That means that you’re saving on your monthly payments and paying less in interest.
2. Start a New Venture
Starting a new business is an exciting opportunity that does require some start-up capital. Most small businesses cost between $3,000 and $5,000 to start up.
That doesn’t seem like a lot, but when you are in debt or you are having trouble making ends meet, a personal loan can be a lifeline.
You can avoid the trouble of having to present a formal business plan when trying to get a business loan by getting a personal loan.
A personal loan won’t have the same strict requirements as a business loan, and you have the flexibility to invest the borrowed money as you see fit.
3. Add Value to Your Home
One of the reasons why people take out personal loans is because they want to take on a major home renovation project. A remodel could cost anywhere from $18,000 to $36,000 depending on the size and scope of the project.
Not many people have that kind of cash lying around, so they’ll turn to personal loans to finance the project.
It’s a smart move because these projects can add a lot of value to the home, which will increase the sale price. You’ll often see people renovate when they’re getting ready to sell, knowing that they’re going to see a return on those funds.
4. Cover Unexpected Expenses
Car repairs, a medical emergency, home repairs, pet emergencies can all take a bite out of your finances. If you’re having a hard time making ends meet as it is, how will you be able to come up with the funds to these possibilities?
That’s where a personal loan can help you. One of the reasons why people turn to personal loans for emergency expenses is because they will be able to pay it back in monthly installments.
5. Build Up Credit Score
Your credit score determines so much in life. Your ability to get a home, an apartment, a job, or any other forms of credit all hinge on those three numbers that make up your credit score.
Do you have to start building up a credit history or rebuild your credit?
Taking out a small personal loan will help you do that. With a small personal loan that’s paid back on time and in full, you’re showing creditors that you’re responsible with debt.
That will also help you increase your credit score.
Ready to Get a Personal Loan?
There are many reasons for a personal loan. When you do take out a personal loan, you want to make sure that you can either save money or make money.
Starting a business, consolidate debt, or start a home project that will pay off down the road are great reasons for a personal loan. The great thing about a personal loan is that you can take them out for any reason, even finance a vacation or a wedding.
Would you like to find out more about getting a personal loan for your financial situation? Find out more about First Financial’s personal loan programs here.