Personal loans are more expensive than secured loans, but this is because you do not need to put any collateral up in order to get a personal loan. When a personal loan is used sensibly it can completely change things in times of need. A personal loan can ease sudden expenditures like high medical bills, moving costs, credit card balances that have got out of hand or expenditures that are more than what you budgeted for.
Financial burdens can be eased through the use of a personal loan when they are borrowed and repaid on time. Take a look at these common uses for a personal loan and see if getting a personal loan is right for you.
Medical and Dental Bills
Health insurance is great to have, but it may not cover everything, which means that some medical bills can start to eat your savings. There are some insurance covers that won’t cover elective surgeries or aftercare, which means you will be stuck with these bills. You are able to use a personal to cover any missed payments for medical or dental bills that you currently have before these defaults start to affect your credit.
Consolidating Your Existing Debt
Credit card debt, small loans and other types of debt can quickly get out of hand. You will need to manage the monthly payments on each debt plus pay different interest rates and you may not be able to keep up with all these payments. A personal loan can be used to consolidate all these debts under one fixed rate loan with a closed end term. This will mean that you will only need to manage a single debt repayment each month with a single interest rate.
Lose High Interest Credit Cards
If you are struggling with a high interest credit card debt then a personal; loan could be your solution. An unsecured loan is more expensive than a home equity loan, but the interest rates will be lower than what you are paying on your credit card. You can use a personal loan to settle the amounts on your high interest credit cards and get rid of these.
Paying for Home Improvements
You can use a home equity loan for remodelling your home or making improvements as this will cost less than a personal loan, but if you don’t have a lot of home equity and you need to make repairs or upgrades then you can get a personal loan. There are some home repairs that can’t wait and if you are remodelling your home or making improvements then you should make ones that offer the greatest return on investment in terms of home value.
Wait…There are more common uses for a personal loan below…
Improving Your Credit Score
If you have consolidated your debts with a personal loan, then you can improve your credit score as long as you have paid the personal loan on time for at least 6 months. If your personal loan pays off existing debt, then ensure that the information about your account has been correctly reported to the credit bureaus. This means making sure that your old debts have been marked as paid.
Paying for a Wedding
Weddings are expensive even if you have a small wedding. Wedding costs include the dress, food, venue, flowers, music and more. You are able to pay for your wedding or just part of it with a personal loan, which will avoid you draining your bank account and your savings account.
Whether it’s a honeymoon or a trip of a lifetime it can be expensive, but a personal loan is often used to pay for these types of trips. Travel is expensive, but if it’s a once in a lifetime trip and you will be able to pay the loan back then it could be your key to travel to your dream destination.
Financing a Car
A popular way to finance a vehicle like an RV, car or bike is to use a secured loan, but if you do not have a credit history or don’t have any equity then you can use a personal loan to fund your vehicle. This could be your first loan and can be a great way to start building a credit history.
Paying for a Move
If you are facing a sudden career transfer or a new job in a different city then your savings can take a hit. You can fund an unexpected move like packing boxes, moving vans, a down payment on a new home and other such things with a personal loan.
Pay for a Funeral
This is something that many of us do not like to think about, but funerals can be expensive. A funeral includes a casket, burial or cremation costs, funeral home fees, food, flowers, transport and more. There are many people that buy insurance in order to cover these costs, but a personal loan can help to cover any shortfalls or if you do not have cover to pay for the full funeral costs.
Personal loans can completely change your situation and allow you to pay for things that you were struggling or unable to pay for before. You should keep in mind that a personal loan is only beneficial when you are able to repay the monthly amount on time.