Are you considering taking out a personal loan? This form of borrowing offers a great deal of flexibility and is a popular option among those who want to pay off high-interest personal debt or fund a once-in-a-lifetime event.
Many people are uncertain about what a personal loan can be used to finance. Here’s a look at the many ways you can use a personal loan to enhance your life and perhaps even save yourself money in the long run.
Do I Need a Personal Loan?
Why should you take out a personal loan? If you need a significant sum of money at once, a personal loan may be the answer. You can also pull money from your home in the form of a home equity loan or line of credit if you’ve built up enough equity to secure one or own your home, but second mortgages are generally reserved for those who need larger amounts of money, such as for remodeling a kitchen or paying for college. A personal loan usually helps to cover smaller scale needs.
Still uncertain if this is what you need? These details may help. A Signature Loan from PSECU:
- Does not require any collateral
- Allows you to borrow up to $20,000
- Often has a lower interest rate than a credit card
What Can I Use a Personal Loan For?
Personal loans can be used for a range of reasons. Here are just a few examples of how a personal loan can help you:
- Paying Off High-Interest Credit Cards
The interest rates on personal loans tend to be more favorable than those on credit cards. If you have multiple cards with balances, you can pay them off and consolidate your payments, reducing it to just one monthly personal loan payment.
Before you go this route, however, you may want to check if you’re eligible for any balance transfer offers that would be a better fit. Consider interest rate, term, and fees to decide what might be the best option for you.
- Closing Out Your Student Loans
Speaking of consolidation, if you have multiple student loans, you may be able to pay all of them off with a personal loan. This has several advantages:
- You may get a more favorable interest rate on your personal loan
- You will have fewer bills to keep track of
- You can free cosigners on your student loans, such as your parents
Whether or not this is a good fit will depend on how the interest rates and terms and conditions of your student loans compare to those of a personal loan and what other consolidation options you may have.
- Financing Medical Bills
Did you or a loved one need an unexpected surgery or dental procedure? Such surprises can be costly, and you may not have the money saved to pay for them. While many medical offices offer financing, sometimes they have steep interest rates and short repayment timetables.
A personal loan allows you to pay off the doctor’s or dentist’s office in a timely fashion and repay the debt at a more comfortable pace — and maybe even at a lower interest rate.
- Footing the Bill for a Dream Vacation
Many people take out personal loans to take care of personal debt, but you can use them for enjoyment, too. Perhaps you’ve always dreamed of going to Europe, the Caribbean or Africa. You know you’ll eventually save up enough money to go, but you want to take the trip now, while it fits into your schedule or you can find the best deal.
A personal loan can give you the upfront financing to take the type of trip you want. Just be sure that you’re able to handle the payments after you return from your vacation.
- Adopting a Child
Don’t let your lack of upfront funds stand in the way of adding to your family through adoption. With a personal loan, you can secure the money you need to pay for the paperwork, medical expenses, and travel required to bring your little one home.
- Buying an Engagement Ring
You may be ready to make a commitment to your partner, but is your bank account ready? You can take out a personal loan when purchasing an engagement ring and wedding bands. A ring is a symbol of your love for one another. Your future spouse will most likely wear it every day, so it’s important you invest in one they love.
- Paying for Your Wedding
Are you getting married? Or is one of your children getting married? A personal loan can help pay for wedding expenses such as:
- Reception venue
How to Take Out a Personal Loan
Now that you have an idea of why you might need a personal loan, the next step is applying for one. Get in touch with PSECU to learn more about our options and start the application process today.
Find more money management tips and resources on our WalletWorks page.