Personal loans are usually substantial sums of money that are borrowed for making large purchases, paying off debts, or emergencies. Such loans are paid back in the form of monthly installments through the tenure of the loan scheme.
While there are many other alternatives that one can try before heading towards a personal loan approval, this article shows you why you must go in for a personal loan and why it makes perfect sense.
Reasons to Seek a Personal Loan
Alternative to Payday Loan
If you need money for an emergency, seeking a personal loan in place of a payday loan could save you a few hundred dollars in interest charges. While the average APR for a payday loan is 391%, the maximum interest rate on a personal loan is typically 36%.
Payday loans have short repayment terms and must be paid off by your next payday. The short repayment span makes it quite difficult for borrowers to repay the loan by the due date. As a result, borrowers are usually forced to renew the loan instead. This causes the accrued interest to be added to the principal and increases the total interest owed by leaps and bunds.
Personal loans have a much longer tenure and will generally cost the borrower much less in total interest. It is the best option for borrowers with bad credit who want to avoid high-interest predatory loans.
It is one of the most popular reasons why people seek a personal loan. Debt consolidation is when you apply for a $2000 personal Loan or a larger sum to pay off your existing loans or credit cards. So, you are combining all of the outstanding balances into a single monthly payment.
The grouping of debt makes it much easier to buy time and work out a plan to pay off your balances without getting overwhelmed.
Homeowners can benefit greatly when they use a personal loan to renovate their homes. Such a loan also serves well in case of necessary repairs, like fixing the plumbing or redoing the electrical wiring.
A personal loan is a good fit for those who lack equity in their home or do not want a home equity line of credit or home equity loan. Unlike such products, personal loans often don’t require the borrower to use his/her home as collateral since they’re unsecured.
A personal loan is a perfect option for financing a small or mid-sized home renovation project.
The average cost of a local move is around $1250, while a long-distance move typically costs $4,890. So, a personal loan is the right choice if you do not have that kind of cash on hand. A $2000 personal Loan can be of great use while you move your household belongings from one place to another, purchase new furniture, transport your vehicle across the country, and cover any additional expenses.
Using a personal loan for moving costs is especially helpful if you’re moving somewhere without a job. This way you can avoid depleting your savings or emergency funds.
Seeking a personal loan is also a wise choice for funding emergency expenses, making large purchases, vehicle financing, and wedding or vacation costs. So, stay away from predatory loan lenders and choose your loan after shopping through multiple lenders. This way you will get a loan with the lowest interest and a longer repayment window.