Personal loans can actually be taken out for a variety of different needs and could be used in an emergency or just when some extra cash is necessary. These examples listed here are quite common reasons for personal loans.
Life doesn’t always work out the way we plan, and, sometimes, emergency expenses are going to pop up. Generally unexpected, these can wipe out your savings or cause you to rack up credit card debt. They could be due to medical expenses, losing your job, suddenly needing major car repairs to keep it on the road, or discovering you need a new roof sooner rather than later.
Personal loans can help you cover those expenses, especially if you don’t have the savings to pay the unexpected bills.
One very common reason people take out personal loans is to consolidate debt. Credit cards or loans across several different vendors can have different interest rates and payment terms. It allows you to pay off one bill a month, rather than several, making it easier to track your finances.
Personal loans for debt consolidation can also help you obtain a lower interest rate than your other loans offer you. It’s quite possible, if you go this route, that you can save a good bit of money through the lower interest rate.
These types of loans may allow you to lower your monthly payment rate or extend your payment terms.
Home Renovation or Remodeling Projects
Did you know that many home remodeling projects can increase the value of your home? Whether you’re looking to change the basement from a storage space to a more usable room or you want to upgrade your kitchen, there are plenty of options when it comes to home renovation. And a personal loan can help you cover these expenses.
If a loved one dies and they didn’t leave behind enough money or life insurance to cover the funeral, a personal loan can help you cover the memorial bills. Today, the average funeral costs $10,000 to $15,000, well beyond the normal emergency savings most families have.
Other Major Expenses
Personal loans can be used for a variety of different costs, and are not restricted to the four listed above. They can also be used for
Major purchases like appliances or HVAC replacements
Starting a business
Celebrations or anniversaries
Repayment of other loans
Reasons for Personal Loans
Personal loans can be extremely helpful in times of hardship or when you’re trying to get a handle on your finances, especially when it comes to those unexpected costs that seem to come out of nowhere. If you do opt for a personal loan, make sure you shop around to find the best interest rate and terms for your needs, wants, and finances.