Guest article provided by: lendzz.com
Personal loans have become quite popular over the last year and have exploded with the rise of the Internet and online lenders. With this rise in popularity and applications for personal loans, it leaves one to ask the question, “Exactly what are the many uses for personal loans?”. In this article we will address that question, but before we do, we’d like to provide a little bit of background information about personal loans and answer a few preliminary questions regarding personal loans.
- What are personal loans and how do they work? Personal loans are typically a form of installment loan, meaning that are for a set amount and are to be paid back in equal monthly installments over a set period of time. Typically, but not always, personal loans use a fixed-interest rate and are used to finance purchases, pay off debt, or for, well, personal reasons. One example of a personal loan would be a $10,000 loan used for personal reasons that is at a fixed-rate of interest of 13% APR, and is to be paid back 60 monthly installments (5 years).
- What are the benefits of taking out a personal loan? Depending on the particular personal loan that you’re approved for and the interest-rate of the debt you currently have, taking out a personal loan may help you save on interest payments if you’re consolidating debt or it may be a more affordable and structured way to pay for a personal expense as opposed to using a credit card.
- How to use a personal loan for debt consolidation? There are a few ways to use personal loans for debt consolidation, but the most typical way is to pay off high-interest credit cards. Here’s on hypothetical example of how that could work: If you had $7,000 in credit card debt that was spread out over five different credit cards that had interest-rates ranging from 19.5% APR to 29.9% APR, and you were then approved for a $7,000 personal loan at 12% APR to pay off those credit cards, you could pay them all off with the funds from the personal loan and have one monthly payment. If the interest and fees on the personal loan were LESS than those of the credit card, you could save money on interest.
- Things to keep in mind when taking out a personal loan: There are many things to keep in mind when taking out a personal loan, but the main things you will want to consider is whether you really need the personal loan or whether you really need the items you want to buy, whether you will stick to the plan if you’re consolidating debt, whether you will save money, and whether this will make your life better or easier in any way. Obviously, these will depend on your choices and your discipline. If you’re using a personal loan to consolidate debt, you need to ask yourself if you’ll make sure to NOT use the credit cards again after cutting them up and paying them off. Make sure you close those accounts! Other considerations before taking out a personal loan may include, but are not limited to: The personal loan amount you’re approved for, the personal loan interest rate you’re approved for, the personal loan terms, fees, features, and benefits.* each personal loan lender or personal loan provider has different fees, rates, features, terms, amounts, etc. Make sure to check with EACH lender before applying.
- So, what are the many uses for personal loans? Now that we’ve covered some basic information about personal loans, let’s take a look at the many uses for personal loans. Personal loans uses may include, but are not limited, to the following: Emergency expenses such as car repairs or medical bills, home improvements such as a new roof or windows, paying off high-interest credit cards, consolidating debt into one lower monthly payment, financing a wedding, financing a vacation, financing a large purchase, financing a swimming pool, investing in yourself by taking courses to improve your skills or education, general personal reason.
- Compare personal loans BEFORE applying for a personal loan. We hope that you will use the Lendzz.com personal loan comparison page to compare personal loans before you take out a personal loan. By comparing personal loans online, you may put yourself in a more advantageous position to find better personal loan interest rates, terms, fees, and features. Check out Lendzz.com and compare personal loans today!
We want to say a big “Thank you” to our friends at AdultingDigest.com for posting this article on their site! AdultingDigest.com is an excellent resource for finding a wealth of personal finance and business finance information on topics such as credit, debit, business, insurance, personal finance and more!
Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/