3 Times When a Personal Loan Could Be Useful

3 Times a Personal Loan Could Be Useful

Money makes the world go round but the sad reality is that sometimes there doesn’t seem to be enough money to go round. While you may do your best to stay financially disciplined in making sure that your expenses are not more than your income, there may still be times when you experience a season when you can’t just seem to stretch your dollar enough. This may lead you to consider a personal loan as an option, as there are different types of loans available to help people meet financial needs.

Lenders provide auto loans, student loans, business loans, mortgages, equipment loans and a whole lot of others. Nonetheless, many financial experts often warn people to be wary of loans because loans when not properly managed could denigrate into a bad debt, and this is certainly good advice. When used correctly, however, there are some situations where personal loans can also be useful. This article provides insight into three instances when a personal loan could be helpful for your finances.

Debt consolidation

A personal loan might be your friend when you have different unsettled debts with multiple creditors who are on your neck with gentle and not so gentle reminders. It sounds counter intuitive to get another loan when you are already struggling with the debt burden of multiple loans – but let’s examine the facts.

When you have different debts with multiple creditors, each debt will have a separate due date, interest rate, and monthly payment amount. Hence, you’ll be under immense pressure to divide up your income to pay all your recurrent bills and send in the payments for all the loans before their due date. You may miss some payments and missed payments often attract penalties and higher interest rates, which will sink you further into a vicious debt cycle.

However, a personal loan could provide you with a lump sum of money that you can use to pay off all your many different debts. Now that you have paid up all your debts you’ll be left with only one loan, one interest rate, and one monthly payment to make. This should make it much easier to manage your finances, because you can focus all your attention on a single loan. Of course, debt consolidation might spread out the repayment over a longer period but if this helps you to get on top of your finances then that could be a good thing. It’s also important to make sure that you don’t end up having to pay more in the long run when you consolidate debts, the idea is to pay less by reducing the interest payable on your overall debt.

Home improvements

Home improvements can make life more comfortable, increase the curb appeal of your property, and increase the value of your home. However, home improvements often require a huge financial commitment and you might not just have enough money to foot the bill. You can dip into your savings to pay for home improvements or take out a home equity loan – but sometimes, these options just don’t make financial sense or simply aren’t available.

A personal loan could help when you are planning a home improvement project. A personal loan doesn’t require equity; hence, you home won’t be at risk when borrowing funds. You also don’t have to go to the bank to process a personal loan and some personal loans can clear in as little as one week from the point of application.

Medical expenses

Nobody likes falling sick or needing emergency medical attention; yet, life tends to throw lemons at the most inopportune moments. Sometimes you’ll be the one needing a medical procedure, other times, a spouse, child, or significant other might need to undergo the procedure.

You may or may not have an insurance policy that covers the needed medical expense. However, the process of filing a claim, navigating the red tape, and actually getting the insurance firm to rise up to the occasion might be a long circuitous journey when the need for a medical procedure is staring you in the face. A personal loan can provide you with much-needed cash fast to pay for the medical expense. You can then repay the loan following a payoff structure that is best suited to your financial situation.

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