Four Common Uses for Personal Loans

The money you borrowed for your personal loan can be used for just about anything. Whether you are researching if a personal loan is right for your needs (read our past blog, “What is a personal loan & Does it make sense for your needs?”) or just got a personal loan, here are four common uses people will apply it toward.

1.Consolidating debt to pay off bills

Paying off multiple loans by using a personal loan, enables you to combine your debt to one payment. This method of paying off bills with a personal loan to pay off bills makes sense if you can secure a low interest rate. A low rate means you will have lower monthly payments, you can extend your repayment term, and free up more of your income for other necessary costs. Additionally, with a lower fixed monthly payment you might be able to save money on interest.

2.Cover unplanned emergency expenses

Prepared or not, emergencies happen. While recommended to put aside monthly (if possible) into an emergency fund, funds may run out or low. Reasons individuals may obtain a personal loan to cover emergencies include, but are not limited to, job loss, reduced hours, auto repairs, medical costs, and helping a family member or friend. Also consider emergencies for pets.

3.Make necessary repairs

Similar to having unplanned emergency expenses, a personal loan can be used to cover necessary repairs that may be needed on your car or home. While there are updates and renovations you may want, you can use a personal loan for repairs, such as a blocked pipe or a gas leak, that affect your day to day and health.

4.Make a large purchase

Larger purchases should be a necessity, such as a need for a new major appliance like an oven or air conditioning unit. Many lenders will inquire what your personal loan finances will go toward, and nonessential items, like an entertainment system, are not a means to borrow money. Another consideration for a large purchase is a car. While you can use a personal loan to buy a car, auto loans are typically preferred.

Under the category of large purchases can also be wedding costs, vacations, funeral costs, and moving expenses.