There are a lot of reasons why taking a personal loan is suitable for the situation.
A personal loan is an unsecured loan that is available to both salaried as well as self-employed professionals. An unsecured loan means the loan does not require any collateral or security. The loan is generally applied to meet emergencies like financing medical emergency, debt consolidation, paying credit card bills, financing new business, improve credit score, meeting wedding expenses, or funding a child’s education.
One needs to have a good credit score to get quick loan approval. A score of above 650 is considered suitable for a personal loan. A personal loan’s interest rate is comparatively higher than other secured loans like home loans, car loans, mortgage loans, and business loans. Below mentioned are top reasons why you should apply for a personal loan.
One of the advantages of this type of loan is that it’s usually, unsecured and you pay back in instalments without the limitations on its purpose as opposed to auto loans, home loans, or others. Lenders don’t ask how is the money is spent, but experts have identified how people spend their personal loans, and here are four of the most practical use of that borrowed cash:
1. Debt Consolidation
This is one of the most common reasons why people take out a personal loan. Consolidating debts through this type of loan means paying multiple debts with the money and combine those outstanding balances into one instalment plan. When you feel like you’re getting hounded on all sides, apply here to see if you can consolidate those collectors’ calls into one payment plan.
This makes it easier to schedule your payments so that you won’t get overwhelmed with the number of deadlines you’ll need to beat. Also, it’s advantageous to use a personal loan to pay off high-interest loans like payday loans and credit card debts.
2. Medical Bills
Not all medical bills are an emergency, but sometimes personal loans can help you get the treatment you need or want. The loan can pay for dental procedures, cosmetic surgery, fertility treatments, and others. It can also be used to cover ancillary expenses like travel, out-patient accommodations, aftercare, and medications.
Accidents or strokes primarily constitute how people make use of their personal loans to pay off medical bills. Although these incidents can be categorised as unexpected expenses, the money can also be used to pay the ancillary expenses mentioned above.
3. Unexpected Expenses
Whether if your car broke down, your home’s plumbing got awry, you or your loved one had an accident, these unexpected events is yet another reason why people take out a personal loan. Unanticipated setbacks in personal finances or in businesses are also practical reasons why people avail of this loan.
One report says that 40% of adults who unexpectedly need $400 in cash resorts to selling their possession or apply for a loan.
4. Home Improvements
When you need a new air-conditioning unit in the coming record-breaking summer heat, install solar panels, remodel your kitchen, replace old appliances, and many more, a personal loan can be taken out to address those needs at home. In one study, 35% of Americans who applied for a loan were mulling over using to finance their home improvement project.
It is also a good option for people who don’t want to or can’t get a home equity loan as it doesn’t necessarily use your house as collateral.
While it’s relatively easy to get a personal loan, it’s best not to use it as a preference for most of your expenses. As explained above it’s necessary to be able to get a loan fast when time is of the essence.
Make sure that the reason for the loan makes sense and that if there are other appropriate loans for that venture, you need to explore those options.