Five Reasons to Obtain a Personal Loan


There are a lot of reasons why personal loans are a popular choice these days. They can help consumers temporarily cover unforeseen costs at a lower interest rate than a credit card, can give homeowners a chance to build property value, and can even be a way to treat oneself or a loved one to a vacation or a high-priced gift. Personal loans, in effect, can be a lower-cost alternative to credit cards.

As an alternative to credit cards, these loans provide flexibility.

There are a lot of reasons why personal loans are a popular choice these days. They can help consumers temporarily cover unforeseen costs at a lower interest rate than a credit card, can give homeowners a chance to build property value, and can even be a way to treat oneself or a loved one to a vacation or a high-priced gift. Personal loans, in effect, can be a lower-cost alternative to credit cards.

Here are five reasons in which a personal loan might be worth looking into.

1.  Paying off debt. At certain times of the year – the holidays come to mind – people may incur more expenses than usual, and that’s another reason to take a look at a personal loan.

As MSN Money explains, consumers should “see if you can get a personal loan at a lower rate than your credit cards to help pay off some (or all) of your debt. Personal loans typically have fixed rates and a three-year term.

2.  Home improvement costs. If a home equity loan has been difficult to obtain for home improvement projects, a personal loan may be the way to go. While they need to be paid off more quickly than a home equity loan, sometimes that’s a good thing.

According to FinWeb.com, “Unlike home equity loans, which often require interest-only payments for ten years before the borrower has to start repaying the principal, with a personal loan you’ll know your project is paid for in a few years – before you’re ready to start a new one!”

So the next time a loved one starts dreaming about a new deck or new energy-efficient windows for the house, tell him or her to take a look at a personal loan. It could help finance a project that will be paid off soon, and the project itself could even add to the value of one’s home.

3.  Family vacations. Vacations are most enjoyable when those on vacation understand their budget. They know what they can afford, and if they’re not paying with cash, they want to feel good about the amount of time it will take to pay off the debt.

That’s where personal loans come in. The money can be paid back quickly, but without the higher rate of a credit card payment.

4.  Health care expenses. If medical bills have started to pile up and there might be some difficulty paying all of them on time, the payee can keep collectors away by obtaining a personal loan. Doing so can also help individuals maintain their credit score.

 5.  Building credit. For renters who have their sights set on a first-home purchase, building credit is crucial and short-term personal loans are one way to do that. These loans are higher risk, but that means a greater effect on one’s credit score.

“Paying off a high risk loan…can provide an immediate credit boost,” explains FinWeb.com. “This is particularly beneficial with short term loans because you do not have to wait very long to get the credit boost. A short term loan can mature in as little as a few months.” For other ways to improve your credit score check out this article.

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