Talk to a debt counselor toll free:800-300-9550
Our Clients Rate Us Excellent
Based on 3234 reviewsTrustPilot Reviews
Personal loans are one of the most versatile of the other debts that you can borrow - apart from credit card debts. You can use it for just about anything. Of course, this freedom will have to be done with a lot of thought and calculations. It may be empowering to have all that extra cash but debt should always be treated with caution. You need to borrow wiselybecause debt, if used well, can help improve your financial situation. But if you abuse it, you may as well say goodbye to the financial stability that you already have. It seems that there is an increasing demand for this type of loan. At least, this is according to the data combined by Forbes. The article mentioned a Bankrate survey that revealed how 1 out of 10 consumers planned to borrow a personal loan in the coming 12 months. 18% of these people are Millennials. A separate study, this time, done by TransUnion, revealed that borrowers of personal loans will rise in 2016. The estimation is a 5% increase. The same credit bureau estimated that 13.7 million Americans have a personal loan in 2015. They revealed that this is a popular type of loan for those who have a good credit standing and a stable income.
What are the different uses for personal loansBut how can you use personal loans to your advantage? There are three simple, yet powerful ways that this type of loan can help you out.
Pay off debt.One of the best uses of this loan is to pay off credit card debt. To be more specific, it is used to consolidate multiple credit card accounts. Sometimes, a simple restructuring of debts will help you get ahead of your debt payments. When you borrow the personal loan, you can use it to complete pay off your balance. That would eliminate your high-interest credit card debts and will allow you to simplify your debt payments. You can concentrate on other things without worrying about missing out on any payment. Since a personal loan is usually paid a fixed amount, you can set up an auto-debit so you can eliminate the chance of being late. Some banks could even give you an incentive for this - like a reduction in an already low-interest rate.
Save money.It may not be believable to use debt to save money. However, this is possible. The best illustration is when you pay off your debts - specifically the high-interest credit card debts. If you have a good credit score, your personal loans can be borrowed with a very low-interest rate. Changing the high-interest credit card with a low-interest personal loan will save you money.
Improve credit.Since it is easier to pay off your debt, the chances of you giving a good payment behavior will be more likely to happen. Not only that, the different types of credit in your credit report will give your score a boost. You have a personal loan and credit card debt. The presence of your revolving and installment debts is a good sign that you can handle different kinds of debts. If you pay it off properly, it will have a better impact on your credit report.
Using personal loans properlySome people say that using personal loans for emergencies is also a smart way to use it. According to CNBC.com, a lot of people are using unsecured personal loans to help them with emergency expenses. Around 13.72 million of consumers borrowed personal loans in 2015. This was an increase from the 10.57 million back in 2013. It is expected that 24 million Americans will borrow this type of loan this year - for emergency expenses. While using personal loans for emergency expenses seems like a good idea, there are better ways to prepare for it. You can save up for unexpected expenses. Instead of using debt to pay it off, it is better for you to save up for a cash reserve. In case that cash reserve runs dry, that is the only time that debt can be used to support your emergency expense. Of course, there are other ways for you to utilize your personal loan. Here are some of them.
- For renovation purposes. Whether it is inside, outside or within the perimeter of your house, a personal loan can help you shoulder this expense.
- For energy-efficient appliances. This may seem off but you will save a lot if you start using energy-efficient equipment and appliances. It is better to enjoy the savings while paying off the loan.
- For your vehicle. If your car needs the be repaired or maintained, you can use a personal loan to cover the expense.
- For celebrations. This has to be given much thought but if it is a one-time event and will not require you to borrow a huge amount of money, then it should be okay. Just make sure you can commit to the payments and you will not compromise your finances for it.