Personal loans typically have fixed interest rates, fixed monthly payments, and a set repayment plan that lets the borrower know exactly what they’re getting into beforehan﷽d. This makes personal loans far more predictable than credit cards, which often have variable rates ꦺand fluctuating payments.

Additionally, most personal loꦦans are unsecured, so they won’t have any collateral requirements for eligible applicants. The fact that personal loans provide borrowers with a lump sum of cash for nearly any purpose can also be enticing, particularly for borrowers planning to use their loan funds for༺ more than one goal.

Top 10 Reasons to Get a Personal Loan

What are the best reasons to get a personal loan, and when should you not get one? Consider the following 10 uses for a personal loan before taking on any new debt with one.

1. Debt Consolidation

澳洲幸运5开奖号码历史查询:Debt consolidation is one common use of personal loan funds, particularly among consumers with high-interest credit card debt. By consolidating debt with a personal loan, the borrower receives a 澳洲幸运5开奖号码历史查询:fixed interest rate and a set 澳洲幸运5开奖号码历史查询:repayment plan that eventually ends wi🦹th them having paid𒅌 off the combined debt.

How much can a borrower save by consolidating their debt? That really depends on how much they owe, the interest rates on their extant loans, and how much they can afford to pay each month. According to the Board of Governors of the Federal Reserve System, the average 澳洲幸运5开奖号码历史查询:interest rate among credit card accounts assessed interest was 22.76% as of Q2 2024, compared to 11.92% across 24-month personal loans.

2. Home Improvements

When you take out a 澳洲幸运5开奖号码历史查询:home equity loan or 澳洲幸运5开奖号码历史查询:home equity line of credit (HELOC) to fund home improvements, either loan type will use the value of your home as 澳洲幸运5开奖号码历史查询:collateral. This typically means that equity loans have lower interest rates than personal loans, since the collateral makes them a safer bet for banks; however, you’re putting your property at risk of seizure if you fail to make your loan payments.

Because most 澳洲幸运5开奖号码历史查询:personal loans are unsecured, you won’t put your home on the line by using a personal loan to pay for a kitchen remodeling, a room addit🍌ion, new carpet, or upgraded appliances.

3. Moving Expenses

澳洲幸运5开奖号码历史查询:Moving expenses can vary depending on where ꧙you’re moving to (⛄and from), how many things you own, and how much help you actually need. For example, you’ll pay more for movers to pack up all of your belongings for you than you would if you just need professional help moving furniture and other heavy items.

Either way, the right per💞sonal loan will allow you to borrow an amount appropriatꩵe to your needs.

4. Medical Expenses

澳洲幸运5开奖号码历史查询:Medical expense🌠s can become overwhelming in a hurry, and no one wants their long-term medical debt to get out of hand. With a personal loan, you may be able to consolidate and more easily pay down medical debt and other healthcare-related expenses over time.

5. Large Purchase

Maybe you want to finance a new furniture set for your living room or are planning an anniversary vacation, but you don’t have the cash to pay upfront. In ei🃏ther case, a personal loan provides a way to borrow money t♚hat won’t leave you guessing how much you owe or when you’ll become debt free.

Additionally, a𝓡s previously mentioned, using a personal loan for a large purchase almost always leaves you with a low꧋er interest rate than a credit card would.

6. Wedding Expenses

According to Zola's First Look Report 2024, the average cost of a wedding is approximately $33,000. While you may be able to cover these costs with a credit card or another type of ꦏloan, the lower interest rate that most personal loans have will likely save you the most money in the൲ long run.

7. Startup Business Costs

Maybe you want to 澳洲幸运5开奖号码历史查询:start your own business, but you’re not quite established enough to qualify for a 澳洲幸运5开奖号码历史查询:business loan or a 澳洲幸运5开奖号码历史查询:business credit card. In that case, you can get a personal loan to fund your business venture. Sometimes, the interest accrued may be tax deductible if the personal loan is used for business expenses. Check with your tax p🅺rofessional to verify whe⭕ther your interest can be deducted before applying for a loan.

8. Tax Bills

If you owe state or federal taxes and aren’t prepared for the amount you’re required to pay, a personal loan may help you weather a 澳洲幸运5开奖号码历史查询:tax season. You’ll obviously have to pay back the funds you borrow, but a personal loan can provide the funds needed to avoid legal and financial penalties for failing to pay your taxes.

9. Divorce Expenses

The costs required to get a divorce can be steep, depending on how much legal help you need. A personal loan can provide a way to pay upfront for the 澳洲幸运5开奖号码历史查询:legal expense🦋s required for a divorce, likely giving you some much-needed breathing room while just requiring you to pay 🤡back what you owe in installments over a set timeline.

10. Adoption Costs

According to a report from the U.S. Child Welfare Information Gateway, the average cost for domestic or international adoption via a private agency can range from $30,000 to $60,000. Paying that much upfront to adopt a child obviously isn’t an option for everyone, but a personal loan could make this a possibility for more ✱people.

How Do People Use Personal Loans?

hxmklzzmallshg.commissioned 澳洲幸运5开奖号码历史查询:a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the 澳洲幸运5开奖号码历史💧查询:most common r🎐eason people borrowed money, followed by home improvement and other large expenditures.

When Not to Use a Personal Loan

There are also a few scenarios in which a personal loan isn’t a borrower’s 💝best option. Here’s when you shouldn’t get a personal loan or should consider an alternate 🍸source of funding:

• You don’t have a specific use for the funds: Borrowing money for no reason is a great way to wind up in long-term debt.
• You can’t afford the payment: If you use a 澳洲幸运5开奖号码历史查询:personal loan calculator and have found that the monthly payment won’t fit your budget, you should avoid taking out a loan.
• Your debt is spiraling out of control: If you need to keep borrowing just to keep your finances afloat, a personal loan will only help you in the short term.
• You have bad credit: Interest rates on bad-credit personal loans are typically exceptionally high, so you should avoid them if you can.

The Bottom Line

There are many reasons to consider a personal loan, but you should only borrow money when you have a plan to pay it back. Additionally, make sure you have a purpꦿose for the loan, whether you need funds for debt consolidation, home improvements, or another goal. 

Once you do take out a personal loan, 澳洲幸运5开奖号码历史查询:create a plan to ensure that you’ll make the required payments early or on time each month. Doing so can help improve your credit while you pay down your debt, and that’s the best-case scenario for all parties involved.