Personal loans are “unsecured” loans since they are not secured with collateral. With an auto loan, your loan is backed by the security of the car but not personal loans. This loans can be used for a variety of purposes like home improvement, medical emergency and many others reasons. Below are some of the common uses of personal loans:
COMMON USES OF A PERSONAL LOAN
This is the number one reason why most people seek a personal loan. It can be used to pay off high interest credit cards, expensive car loan and other high pressure debts such as payday loans. All these debts can be consolidated into one loan with a fixed interest rate with a lower fixed monthly payment that is manageable. The personal loan will most likely have a closed end term of a few years enabling the borrower to be debt free in for example three years. The goal here becoming debt free quick and saving money in the process.
Whether you want to put on a new roof, install solar panels, remodel your kitchen or add a swimming pool, hot tub, proper landscaping, a personal loan can help. You can use a personal loan for immediate repairs too. Heating or air conditioning system repair, leaking roof, cracked driveway or other emergency repairs after severe weather events. Or maybe you hate the old worn out wall paper on your walls, a personal loan can help hire pro painters to do the job.
Emergency health care costs come with a hefty bill. With raising medical costs all across the country, unexpected medical costs can be very stressful when they come due soon after a medical emergency. Lenders are used to receiving personal loan request based on emergency medical conditions. Some may include dental surgeries, fertility treatments, braces for the young ones, after surgery care, expensive medications and many more. It is good to know that sometimes when the unexpected happens, a personal loan can make a bad situation from becoming even worse.
With normal wear and tear, cars need constant repair and upkeep. An engine overhaul, transmission repair, emission system repair, shocks and struts, and other costly expenses can be paid for with a personal loan. Since most people buy a car with a secured loan, it becomes a challenge to pay for other emergency repairs that come unexpected. Some people may also not have a good enough credit history to qualify for a secured loan. Other expenses related to this include motor cycle purchase and repair, snowmobiles and boats and recreational vehicles. A well-maintained car means you will be able to get to where you need to be when it rains or snows or sunshine.
Securing a small business loan from a traditional bank can be very challenging especially if you are just starting out. Insufficient collateral is the most common reason small businesses are denied loans and not having a history to prove cash flow. Many personal loans are unlikely to require collateral since they are usually unsecured. You may not have enough savings or investments, and if offering your home as collateral is out of the question, you may want to consider a personal loan. Most banks will not even fund a business loan that is so small for the needs of a small business.
Life has many expenses, some expected and others may come from nowhere. Some other uses for personal loans may include; travel expenses for family or vacation, funerals can be very expensive, weddings, moving expenses especially long distance moves across states, children’s school trips overseas, and many others. A well-managed personal loan can be a great source of funds when needed. When paid off as agreed with the lender, it can also be a good positive boost to your credit history.