What are personal loans? Personal loans are nothing but borrowed money that is used to fight financial conditions, supplement an unavoidable occurrence or for making large purchases. In return, these loans are paid back to the lender in the form of monthly installments over a period of 2 to 6 years. But depending on the circumstances of the borrower, this period can be prolonged depending on how persistent you are in making the payments. However, it surely sounds frivolous to choose or get a personal loan for personal causes, but nevertheless it surely proves beneficial to the borrower under certain genuine circumstances, especially when the loan amount is rightly used and timely paid back to the lender.

 

 

Here are 6 most important reasons why you must apply and acquire a personal loan:

1. Consolidate debt

2. Substitute for a payday loan

3. Fund your home remodeling

4. Help for paying moving expenses

5. Finance for unexpected emergency expenses

6. Paying for a large purchase

Let’s discuss each of these reasons in details:

1. Consolidate Debt

Amongst all the rational reasons given for taking a personal loan, debt consolidation is considered as one of the most crucial and common reasons. To understand better, imagine a borrower with multiple loans or with outstanding credit cards, each with different due balance amounts and interest rates. This in simple words makes the deadly cocktail called Financial Trouble. And this is where a personal loan comes in as a saviour for the borrower.

So, when a borrower applies for a personal loan for the purpose of debt consolidation, he/she combines all the outstanding balances to make one monthly payment. The assemblage of debt, although may sound a little worrisome, makes it simpler for the borrower to plan a timeframe for paying away all your standing balance amount without getting exhausted.

One of the best known advantages of taking a personal loan is to pay away your credit cards at a lower interest rate. You can hence, reduce the total interest rate amount that you pay and also the total amount of time that usually takes to pay away this debt. This process allows you to clear away your credit card balance within its terms and a clear end-date in mind.

2. Substitute For A Payday Loan

Not everybody has a strong financial backup to pay for their expenses. But if you are facing stringent financial conditions, taking payday loans to help you sail through the situation may just sound as the perfect short-term solution. But, payday loans are usually voracious, leaving the borrower in a much worse situation than earlier. Hence, before you make your decision on choosing a payday lender, take a step back and consider learning about personal loans.

Payday loans are definitely easy to find, but they also carry extreme risks especially if you fail to pay back the amount in the agreed time period. There are a few payday lenders who charge their borrowers with an interest rate higher than 400%. On the other hand, personal loans are not only simple but also give way to lower APR rates.

3. Fund Your Home Remodeling Plan

According to the senior marketing vice president of LightStream, Kristin Shuff, personal loans are without the slightest doubt the best options to finance your home remodeling project.

It doesn’t matter whether you take this loan for building a new roof in your house, installation of solar panels, add a lavish swimming pool, landscaping your garden or remodel your kitchen, if you currently do not have the money in your hand to make the changes, a personal loan definitely can help you to make these improvements.

Moreover, personal loans are considered a good option for people who either do not have a ownership in their home or do not wish to get a home equity line of credit.

4. Help For Paying Moving Expenses

In the most common situations, people don’t usually need a personal loan for relocating over a short distance. Although for a long distance relocation over a new job opportunity, the expenses can be really high, thus making it permissible for a personal loan.

The cash you get from a personal loan can greatly help you to relocate your household belongings, purchase new furniture, transport your automobile and any other expenses that you may suffer from.

However, before you go ahead and shop a personal loan to cover your relocation, make sure that your new income or salary will be able to pay off the personal loan amount. Considering this payment will help you to avoid any further added stress to pay off your personal loan in addition to your new career and a new place.

5. Finance For Unexpected Emergency Expenses

• Finance For Funeral Expenses

When we think about personal expenses, funeral payments are one of the least thought about expenses. Well, it is definitely a topic that is uncomfortable to discuss but is surely a great help to plan and finance the funeral event of a deceased family member.

Funerals are an expensive event. The entire process may cost a total of a few thousand dollars, including everything from burial plot, funeral home services, casket and other related factors.

So, if a deceased person’s property cannot afford these funeral expenses, then a family member can choose to apply for a personal loan that will cover the funeral costs of the deceased person.

• Finance For Medical Bills

Medical expenses are one of the most important reasons for people to take help of lenders offering personal loans.

Even the most common medical treatments may use the help of personal loans. These include, cosmetic surgery, dental treatments, fertility treatments, etc. that usually may cost around or over $5,000. Additional expenses such as parking, medical travel, medications and also, aftercare expenses can all effectively be managed using a personal loan.

6. Paying For A Large Purchase

Our life is a series of unexpected moments. And this however holds true to household disaster more. For instance, you may suddenly need to buy a dryer, a washing machine, oven, refrigerator or air conditioners, but you do not have any ready fund in your hand to make such massive payments. In such situations, personal loans act as a big relief by helping you pay for such larger purchases.

Personal loans in these circumstances help you to purchase almost all major home appliances as well as electronic items, without having to wait for months and saving money for buying them. Well, you may although have to suffer some basic loan fees, but personal loans can also help you save your money and time in the long run, especially as you will be avoiding the much more expensive alternatives such as using Laundromats and buying baked goodies from a bakery.

Buying A Car, RV Or A Boat

There are many other reasons for people to apply for a personal loan. One of these reasons includes buying a recreational vehicle, car or a boat. Well, after all not all people are millionaires, walking with thousands of dollars in their accounts to buy their requirements.

People may need personal loans for other larger purchases such as buying a small home, snowmobiles, horses with a saddle and trailer, motorcycles and more. Schuff says that all secondary expenses that usually relate to the purchase of a horse or a similar requirement can be added into the personal loan.

So, if you did not qualify for a secured personal loan and get a lower interest rate, then personal loans can certainly help cover the purchases.

Paying For Your Wedding

Weddings are one of the most expensive celebrations. So, it’s not really a surprise when you hear people discuss about wedding loans or rather personal loans.

Taking personal loans for occasions such as wedding in some cases seems to be a good idea. It can be just the ideal solution to some of your bigger expenses such as a bride’s dress, the wedding venue or a few smaller expenses such as flowers, decoration, wedding coordinator, cake etc. Taking a personal loan in simpler words, gives you a good flexibility to pay away a part of your expenses.

You can use a personal loan to even purchase a beautiful engagement ring. And buying good and sparkling engagement rings can really cost you several months of your income. So, if you don’t wish to use away all your savings and also buy your desired ring, taking a personal loan will surely help you make your dream come true.

Paying For A Dream Vacation

What is the cost of your average vacation? Well, looking at the current economic criteria, vacations are not that expensive, unless you are planning for a luxurious cruise or your honeymoon. This is exactly where personal loans can help you!

Just as a persona loan can help you pay for your wedding expenses, it can also help you enjoy your honeymoon or your dream vacation. Thus, it doesn’t matter whether you are celebrating your anniversary or just graduated or wish to go global trotting, personal loans can help you enjoy your dream vacation.

Tips To Keep in Mind

Lastly, one of the most important aspects that you need to understand about personal loans is that they can be used for almost anything and everything. There are no hidden limits when it comes to using a personal loan.

Yes, people take personal loans for their different reasons, but you only need to remember one thing, that is to repay the amount within the mentioned time period. So, when you choose to take a personal loan for paying away your credit cards or pay the expenses of your wedding, you need to understand that you are borrowing money that later needs to be paid with added interest rates.

Personal loans are one of the best debt consolidation solutions and also the most ideal solution to make huge purchases, and it is your responsibility to use this available financial resource wisely.