For as much as people like to criticize getting a personal loan, they can actually be a very valid way to solve a huge variety of financial problems. Life happens no matter what our bank account has to say about it, and it’s important to be able to keep up with the twist and tug of financial emergencies and surprises.
Are you ready to be surprised by 5 amazing ways a personal loan can revolutionize the way your finances are handled currently? Read on to see how you could begin making a difference with your money today!
1. Debt Consolidation
For some, getting more debt may seem like a counterproductive idea, but it’s actually quite the opposite. When you have multiple open accounts you’re paying back, those rates add up, a lot. Especially if you have credit card debt.
A loan that consolidates your debt is a great way to end the multiple payments, high APR, and poor affects on your credit score. The loan will pay all your balances and now you just have one monthly amount to worry about.
The reason people get this kind of loan is that you save money in the long-run! Many online lenders offer these solutions, so it’s worth comparing their rates with what you pay monthly.
2. Medical Bills
If you’re like most Americans, you’ve been screwed by the medical industry. Medical bills can be pricey, scary, and a huge source of stress. Plus, dealing with a hospital billing department takes about half the day on hold and being transferred.
Instead of worrying about any of those stressful events, pay off your medical debt with a personal loan. You’ll get better interest rates, more repayment options, and an easier staff to deal with. Plus, they can be changed as you go, whereas a hospital is less likely to be open and flexible with your needs.
There is also special companies out there that provide cards and loans specifically for medical debt, so it’s worth looking into!
4. Major Life Changes
Sudden circumstances can present themselves suddenly. Dates in our life become very important, and when we put so much stock into them, not having the funds to support these situations can be a major source of stress for many.
From weddings to funerals to a new baby, life happens and sometimes the wallet can’t keep up. You should never feel like you need to hit the pause button during a major life milestone just because you can’t afford it at the moment.
Personal loans make it possible to get the nursery finished, the wedding venue booked, or the details solidified even if you don’t have the cash right then. With a reliable repayment plan, you can easily get your life moving as fast as you desire!
5. Improve Credit History
Contrary to what people generally think, not borrowing money does not improve your credit rating.
To understand it better you need to observe the formula that is normally used to measure your credit score:
- 35% of your rating is based on payment history
- 30% is determined by current debts
- 15% is determined based on your credit history
- 10% corresponds to new credit requests
- 10% corresponds to your current types of credit
Obviously, you cannot have a qualification if you never ask for loans or, at least, you use your credit cards frequently and responsibly.
So, if you plan to request a high loan in the medium or long term, to buy a car, for example, you will need to start with the one that you are able to pay in a short period of time.
This is called “build the credit”, and the objective here is that the entities or lenders to which you turn can verify that you are responsible with the payments, because these loans are usually without collateral.
Loans with a guarantee are those in which you must leave something of yours of equivalent or superior value to the money financed under the power of the lender.
But, in most personal loans, while banks can seize your assets, these are always in your possession; this is an unsecured loan.
That is why the lender needs to know that you are a responsible borrower, something that is only verifiable through your credit history.
Having no credit isn’t even an option anymore. Back in the olden days, debt was frowned upon, and borrowing money was a sign of irresponsibility. Now?
You’re judged on the way you borrow, and even no debt is considered bad! You need a credit score for renting apartments, getting loans and credit cards, car rentals, and more. You basically need a score to survive.
In most cases, you need a good score to get the best offers. How do you do that with building or poor credit? A personal loan designed for people with lower scores is a great way to jumpstart your progress and it’s safer than a credit card by allowing less room for error.
Secured loans are a great way to see a rise in your credit score, but you can see improvement with unsecured loans, too. Make on-time payments and keep your debt-to-income ratio low, as well as your utilization. Before you know it, the numbers will be your best friend!
6. Main Dwelling
A reasonable reason to request a personal loan may be to purchase or repair the main home.
We are talking about buying or repairing your main house, and borrowing money to buy a cabin in the mountains or the beach to vacation, for example, is out of the question.
Typically, loans related to primary housing offer the lowest interest rates, and monthly installments can almost always be negotiated with the lender.
Of course, the longer you delay in paying more interest will be taxed.
A bit of advice… before choosing a personal loan for such a long-term, you should analyze if during that period your income will remain stable
On the other hand, loans for home renovations are also an excellent justification for incurring debt. There are two justified reasons for reform:
Over time your house could deteriorate due to rain, flood, plagues, or simply by use.
If you do not have the necessary funds to repair it ASAP, you can go to the bank or a lender to get the money you need for the materials and technical service to avoid any problem to generate damage.
Revalue The House:
If you are thinking about selling your house and have been using it for several years, you may need to give a renewed look, especially in the bathroom and the kitchen.
Reforming some spaces can help you get much more money than you would if leave the house untouched.
7. Pay for Education
The current labor market is increasingly demanding with young people who join, and if you do not have specialized academic training it is difficult for you to obtain a well-paid job or the possibility of professional growth and scale within a major company.
Avoiding this situation is feasible if a period of life is dedicated to pursuing university studies, even if they do not ensure success in life.
However, not everyone has the economic resources to finance such studies (registration, books, and rates, among other things).
Investing in your future through a personal loan for students is a justified cause to acquire such debt.
Following that idea, these loans are usually low in interest, and most of them offer inactive periods so that the borrower can focus entirely on their studies.
In This Regard You Should Not Forget:
- These loans are usually the first that a person acquires, and the way you behave will help to determine a good deal of your credit rating.
- Acquiring unnecessary debt could jeopardize your future, do not ask for more money than you need. If you are not able to pay it, the federal government can garnish your salary (which you have not yet begun to earn) until you cancel your debt.
These loans can finance a portion or all of the expenses generated by the education and maintenance of a student which is a magnificent tool if you need a career to land the job that you want.
8. Main Car
Acquiring a car of your own is a goal that most people have set. It is important to make clear that acquiring a personal loan debt for a second car does not cover a need, but instead becomes a luxury.
On the other hand, a car for family use can be considered a necessity.
In view of a large number of people who request personal loans with this intention, almost all banks, in addition to others entities, offer specialized products for the acquisition of your vehicle, both new and used.
Your duty is to go to these entities or visit their websites to analyze if you meet the requirements established for the acquisition of your main car.
Another option that you have is to go directly to the dealer and find out about the financing plans offered by the manufacturer.
Keep In Mind That Banks Tend To Be Less Demanding In The Following Aspects:
- Monthly fees may be lower
- You can direct payments
- Dealers do not let you sell the car, the bank does
- Interest rates may be more favorable
Given the case that you already have some savings made for this, you can go confidently to a lender to get the funds you need and buy a car that meets your needs by having to ask for just a part of the deal.
9. Financial Independence
If you would like to start your own company, you will have to face various expenses –like employees, legal requirements and the initial investments.
That is why independent workers, among whom small businessmen can be counted, can ask for personal loans.
An advantage in this regard is that small business owner can include the assets of these as personal loan guarantees.
Thanks to this, you can obtain bigger loans than the ones approved for personal use.
Acquiring a personal loan, for this reason, is a good opportunity to replace work equipment, purchase raw materials or supplies, to mention a few advantages.
Besides, it can also provide the necessary funds to venture into a new market, open branches or establish partnerships to maximize the potential of your business.
It is also a good idea to request a personal loan for the flow of money handled by small entrepreneurs. With good planning, you could pay off the loan in less than a year, which will help improve your credit history and obtain lower interest rates on your next loan applications.
Keep in mind that financial institutions created specialized products for this class of clients, which, although they manage higher than average cash flows, such revenues tend to be higher at certain times of the year depending on the activity of the business or company.
Try to find out about the benefits of this kind of financial products and boost your business.
These are just a few reasons to apply for a personal loan, there are many more, how to furnish the house or face an unplanned expense.
Some people apply for personal loans for more superfluous reasons, such as aesthetic operations, paying for vacations, holding a wedding or similar things.
Nevertheless, you have to play responsibly. Before acquiring a long or medium term debt it is convenient to analyze if the reason is well justified.
Remember that many things can be done with money, but not all are advantageous.
In the end, a personal loan is a financial tool that will allow you to improve your quality of life if you use it well, but it can ruin the economic stability of your family if you do not get the accounts right.
You only have to acquire debt if you are able to pay, and something that can help you determine it is that the installments do not exceed 30% of your monthly income.
Ready To Get Started?
Personal loans can come in handy for a lot of things, but the 5 most popular reasons people make the choice to get connected with a financial solution are looked at closely in this article. If any of these seem like great choices for your life and current financial standing, take a look at our trusted lenders to get started!
If you like the ideas we listed but aren’t sure how to go about finding a good online lender to get started, consider using a connection service. These platforms are designed to bring you closer to your goals by finding offers for you and comparing them easier for you to view your options.
The best services that match you with lenders that we recommend are:
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