If you’re looking to consolidate debt, plan a vacation, buy a car or just help manage your finances through rougher times, a personal loan can offer you flexibility and options to make those purchases that a credit card pay not give you, and won’t require you to put your assets up as collateral the way a HELOC does.
You certainly need a strong credit history and a suitable income to manage your living expenses and leave enough over to pay back the personal loan and leave enough left over to have a life, but if you’re strong enough to qualify, a personal loan is a productive method for financing the following:
– Consolidate your credit cards and other debt. If you’re making payments on several different high interest credit cards or other financing such as a car loan, you can use a personal loan to pay off all those lenders and put all that debt under one single payment with a generally lower interest rate in the 8-14% range. For those who aren’t inundated with low interest credit card offers, a personal loan may be the best way to consolidate debt.
– Make a major purchase you currently don’t have the funds for. Maybe you need a replacement car, or you want to take a dream vacation. Waiting 3-5 years to save the thousands of dollars you need to do it just doesn’t make sense, or you’re not sure if setbacks while saving will delay your plans. Perhaps you have the credit line to make a big purchase, but it requires cash. A personal loan can allow you to pay for a decent used car now, take your dream vacation now, pay for a wedding now or pay for a big purchase with cash, and gradually pay back the needed money with interest over several years of manageable monthly payments.
– Give yourself extra needed or security capital. You may be struggling to keep up with your bills due to a life event, or you know the next few months could get hairy, and you just want an extra few hundred or a few grand in the bank to cover your assets just in case you need it until things get better. A personal loan can put that emergency capital in your hands, and you can pay it back gradually.
Credit cards are great for small on the spot purchases, but bigger purchases require more stable, manageable financing. A personal loan gives you the needed capital to make big purchases and pay your bills now, and repaying the loan is as easy as one monthly payment over the next 1-5 years. Whether to consolidate bills, make a big purchase or to keep your finances in order when needed, personal loans offer a financial advantage you won’t get from any other financing method.