There are many good reasons to take out a personal loan, including reinforcing costly credit card balances and financing once-in-a-lifetime trip or weddings, but they are often most useful for less festive events, like medical emergencies or home expenses.
Individuals may rely on a personal loan – funds borrowers receive from a credit union, bank or online peer-to-peer lender without having to present some collateral – for almost everything. This suppleness adds to their appeal, as does the fact that the approval process is usually pretty quick and straightforward: If an individual’s credit score is good and the lending company is satisfied by the income information that he offers, the loan funds can often be stored into the borrower’s account within a week or less. Here are some suggestions on when it makes sense to consider a personal loan.
To Cover the Unexpected
When the unexpected happens, fast funding proves more than handy. And unexpected can be anything: losing a job, a ruined car or trying to make things work during a global pandemic, there are often extreme situations when the need financial help arises.
Depending on an individual’s particular emergency, loans can help one find other, even better financial help with which to get through the emergency. For example, when losing one’s job, it is possible to apply for unemployment benefits. But a personal loan is way more helpful than something like a payday loan which generally charges such high-interest rates that it’s almost impossible to pay them back.
To Pay Medical Bills
Another great concern of any citizen is medical bills. People sometimes use personal loans to recover for mounting medical bills. Before deciding if online loans in Australia is the right method here, take into consideration that an individual must have insurance, before being able to cover at least a small portion of the medical expenses. Depending on the medical costs that an individual has accumulated, it might be possible to get on a payment plan.
Medical facilities, dentists and doctors will come up with payment plans to allow individuals to break up one weighty payment into smaller, more affordable chunks. However, in order to do this efficiently, in is important for individuals to explore their options and look for the personal loans that have the lowest interest rates.
To Finance Student Years
A university or college education can be quite expensive. Typically, students rely on student loans to help cover their school costs. In some cases, a personal loan might prove beneficial if an individual wants to pay for school-related costs.
For example, when applying for a student loan – there might be some restriction regarding its use – in the sense that it must be used for educational expenses. However, a personal loan isn’t that limiting. Therefore, if an individual needs money to sort out something that isn’t covered by a student loan, then maybe a personal loan may be the better choice.
Also, the interest rate on loan should be another decisive factor. It is possible to get a personal loan with a lower interest rate than some student loans, making it a great tool to use in order to recover from a student loan. However, it is important to keep in mind that, when relying entirely on a personal loan to pay off a student loan, there is a big chance to lose many of the benefits that come with the latter such as the forbearance or delayed payments.
To Cover a Whole-home Remodel without Stress
Home remodelling – another costly need of which many of us are so scared. A personal loan can be a great choice to pay for it, whether a homeowner needs to replace your roof, remodel your kitchen, install a solar panel or add a swimming pool.
What’s more, a personal loan is a smart move for those who don’t have equity in their home or don’t plan to get a home equity loan or a home equity line of credit. Unlike home equity products, a personal loan doesn’t require the lender to use his property as collateral. In doing so, they are less perilous.
Who benefits the most? Individuals looking to finance a small to mid-sized home upgrade or improvement project.
Takeaway: Personal loans are meant to help individuals fund a home improvement project even if they don’t have equity in their home or don’t want to rely on a secured loan.
To Cover Unexpected Costs of Moving
Most individuals are unlikely to require additional funds in order to move house on a short distance. However, a long-distance move is another matter. In this case, costs can be expensive enough to require applying for a personal loan.
Personal loan funds can help individuals relocate and move all of their belongings from one place to another, upgrade the new residence, transport vehicles across the country and tackle additional expenses.
However, before throwing applying for the first suitable offer that could be used to cover moving costs, individuals should determine if their current income is enough to pay off their loan balance. Doing so will help borrowers avoid the additional stress of dealing with loan payments on top of moving to a new home.
To Cover Wedding Expenses (That Cost More than You’d Think)
For most individuals, it’s a good idea to consider a personal loan before walking down the aisle. Personal loans can be used to tackle big-ticket items such as the bride’s dress, the venue, as well as other smaller costs such as photography, flowers, the cake and wedding planner.
Not only that, but a personal loan can also be invaluable when it comes to paying for an engagement ring. Depending on an individual’s taste and the material of the ring, it can take several months to pay the bill for what is, essentially, a glorified piece of jewelry. Getting a personal loan is usually the best guarantee that a couple will not run out of cash in the middle of organising the wedding.
In the end, a personal loan can be used for almost anything- even beyond options suggested in this article. Keep in mind that personal loans can be a great way to make major purchases and consolidate debt, however, this does not mean that the funds accessed through them should not be used responsibly.