Not all financial needs in life can be budgeted for and some may require more than you have stashed away in your savings account. Even the best financial planners will at one time or the other fall short moneywise and this is when personal loans step in to save the day.
Personal loans can help take care of big-ticket expenses or purchases, meeting any shortfall you might have financially. This loan is unsecured and open to use in whichever area of your financial life; it is needed the most. They can pay for anything from a car to medical contingencies and even weddings.
These loans are availed when the person requesting them has met all the required eligibility criteria. This means that they have to prove that they are worth the money by providing certain financial information to the lender. This may include information such as;
- Employment history
- Credit history
- Income level
- Repayment ability
You will not need to secure this loan with your car or home or any other asset you might have. These loans are termed as unsecured. These sources of cash also have lower interest rates than payday loans, moneylenders or pawnshops.
Common uses for personal loans
1. Debt consolidation
When you have racked up a high credit card debt and it seems like it’s taking you an eternity to see the light at the end of the tunnel debt consolidation can be a lifesaver. Wrangling a myriad of bills each with its own set of rules and interest charges can be a painful experience.
Debt consolidation can be an easier way out. In fact, it is a very tempting route because the process gets rid of that debt clutter and neatly packages it into one neat automatic payment at the end of the month.
Debt consolidation services can be handy if you are a sinking ship in a sea of debt. If for example, your credit card company is unwilling to negotiate for lowered interest rates and the interest rates have skyrocketed, debt consolidation can step in to save the day. When the bills are also coming in at high speed and throwing you off balance, these services can be your key back to stability. Using a personal loan to aid in debt consolidation is a smart financial move.
Emilie Burke a blogger on debt and how to overcome it decided that it was time to pay off her massive credit card debt. This would help her live a better and more balanced lifestyle. She took out a personal loan to pay off the debt which assisted her in cutting back on interest charges and therefore saving money.
Her cards had interest charges of 16% to 22%, but after her debt consolidation, this charge dropped to an affordable 8%. A personal loan can help reign runaway interest charges from high-interest credit cards debt since debt consolidation has interest charges as low as 5% to 6%.
2. Home renovations
The one advantage of using personal loans for home improvement purposes is that this money will be used to increase your home’s value. There are personal loans specifically tailored for renovations that assist in home refurbishment. Since your home is bound to increase in value after renovations, then this loan has a lot of value to it.
Getting such a loan for home renovation is easier because it has less red tape than other types of bank loans. Their interest rates are also affordable and lower than those of online or payday loans. The funds are usually deposited into your account making it easy to pay your contractors in good time.
If you are for example renovating rentals, personal loans can turn to be a good investment because they will increase your cash flow. People generally are willing to pay more for better houses. Even if you are satisfying the bi-annual or annual homeowners itch to spruce up your home with new carpeting, a fresh coat of paint, better appliances or furniture the feelings of satisfaction the renovation will bring could be worth the price of the loan. Feeling happy in your home will make you more productive in other spheres of life.
3. Medical expenses
Life can turn upside down in a flash. In one moment you are preparing to go for a vacation while in the next one you are lying in a hospital’s intensive care unit fighting for your life. Then comes the costly medical procedures with difficult to spell names that cost a fortune.
Well, we all have emergency kits for such rainy days, right? Wrong! A survey shows that a substantial 23% of all Americans do not have any rainy day funds. Of those who have saved, it is only a small 29% that have enough in their funds to cover six months worth of their living expenses.
This is part of the reason why a medical emergency causes so much worry. A large medical emergency could actually put you in a financial hole and bury you. Since personal loans can be as low as $1000 or peak at $100,000, they can cater for most medical expenses.
Their interest rates are much lower than credit card or payday loans depending on your credit score health. If you have stellar FICO scores, you will most certainly enjoy interest charges lower than 10%. These credits from realistic loans are also perfect for emergencies because they can be disbursed in record time. We are talking minutes or hours, unlike ordinary bank loans that take ages.
4. To cover other emergencies
As mentioned too many people do not have emergency savings stowed away for that unexpected financial emergency. Most end up covering these costs with their cards which charge exorbitant rates.
Personal loans are more pocket-friendly and have friendly payment schedules that are usually agreed on with the lender. They make room for three year or five-year repayment schedules. This means that you know when picking the loan, just how long you need to pay them off and go debt free.
5. Funeral expenses
Final rites and funerals can cost a fortune, and since death is most unexpected, few people ever have enough money to foot the bill. To afford your loved ones, a dignified funeral brings a lot of comfort, and it can be very distressing when there are no finances at hand. With personal loans, you will get the cash through their fast lending processes and enjoy attractive rates and payment schedules as well.
6. Fixing a vehicle
Picture this; you are driving to work, and a carelessly overtaking driver leaves you in a ditch and speeds off. You car lights are a mess, and your front bumper is all mangled up. Car repairs and maintenance costs can cost an arm and a leg.
If you do not have emergency savings to foot them, you could find yourself unable to get to work. Personal loans can save the day helping you get that vehicle back on the road fast and back to work to make more money.
7. Moving costs
Moving from one locality to the other can be very expensive. However, there advantages to it if, for example, you are getting a better paying job or an affordable house. It could also be to find a better living space for your family. Some advantages of moving houses are not quantifiable financially but are very beneficial to your well being. Long distance relocations can cost thousands, and if you have no cash for it, a personal loan could come in handy.
If you are going to take out a personal loan be very careful and plan to ensure that you spend it wisely. Do not divert its use to other causes but make a budget that you will implement once the money is in the bank.