Personal Loans: How Can They Be Used, and for What?
There are a number of reasons as to why even the most responsible of adults could end up in a tight spot financially. Alternatively, some people just happen to fall short of achieving a goal for something they need. In any case, there is now something that can be done about it: taking out a personal loan.
What Is a Personal Loan For?
For the most part, personal loans are taken out (and issued) for major life expenses. They are the fastest-growing types of loans, second only to mortgages. Since no collateral is involved, their popularity has been on the rise.
Falling just under the budget for that dream wedding? Take out a personal loan. Need to get a home addition? Take out a personal loan. A medical emergency that involves expenses outside insurance (or not having insurance at all)? Take out a personal loan. Even the consolidation of credit card debt can be resolved through a personal loan.
The possibilities for use rely largely on two factors: it's either an unexpected expense, or a debt that really needs to be paid off. Personal loans are cost-efficient in that they generally have lower interest rates than credit cards, which is why many people prefer them instead. This is because a fixed-rate interest is a typical default for these loans.
How personal loans are used can vary quite a bit. That said, they're still loans, and they still have to be paid on time. Having a full understanding of loan terms and payment timelines is vital for it to actually help things along in the long run.
Ideal Ways of Using Personal Loans
1. Credit Card Consolidation
As previously mentioned, personal loans can be used for credit card debts to be consolidated. Paying off even a single credit card can be stressful already, especially when interest rates are high. Having more than one makes things more stressful and tougher to pay off.
A lump-sum payment to clear credit card debt made with a personal loan can work wonders. What will follow is the less heavy, less stress-inducing monthly payments against the personal loan.
2. Financing Home Renovations
The stay-at-home orders and overall lockdowns courtesy of the coronavirus pandemic have led many people to somehow upgrade their homes. Last year, three-fourths (76 percent) of homeowners did at least one home improvement project. These can be rather pricey undertakings, and a personal loan can solve the cost issues for this quite neatly.
3. Paying for Medical Expenses (Humans and Animals Alike)
Whether the sudden emergency involves you or your beloved pet, the expenses are bound to be steep. Costs can be covered quite easily through a personal loan. Medical bills are actually one of the main triggers for Americans to end up in debt.
Personal loans are a great way to get quick funds for either an emergency situation like post-disaster home repairs or a major life milestone like a wedding. They're usually on fixed-rate interest by default and require no collateral. Ideal ways of using them include financing home renovations, paying for medical expenses, and credit card consolidations.
Trying to get personal loans online in Nashville, TN? Contact Mid-Town Finance today! We have no hidden fees, but please note we don’t do title pawn or payday loans.