Get tips for funding life’s surprises
Life happens. No matter how much you might plan and save, water heaters break, once-in-a-lifetime appliance sales come along, unexpected wedding or school expenses arise. This is exactly why you might be exploring top reasons for getting a personal loan.
Whether a large one-time purchase like a home renovation, new or used car or you want to consolidate debt, a personal loan can have real merit. Let’s take a look at personal loans and how to use them.
What are the best types of personal loans?
Knowing how you can use a personal loan starts with understanding the variety of personal loan types available.
- Unsecured personal loans: Most people opt for this type of personal loan. They don’t require collateral and often come with a higher interest rate.
- Secured personal loans: Backed by collateral like your home, car or savings, secured loans usually come with a better interest rate.
- Variable-rate personal loans: With a benchmark set by banks, the interest rates on these loans can rise or fall over the life of the loan, which means they’re most valuable to those who can pay it off in a few months.
- Co-signed personal loans: These loans are secured by a cosigner who agrees to pay the balance if you’re unable.
What can I use a personal loan for?
The best time to take out a personal loan is when doing so helps you make (or save) money in the long run. If you have a large one-time expense approaching and you are asking yourself, “What can I use a personal loan for,” check out this list of the top 8 reasons to consider a personal loan:
- Debt consolidation loans
- Home remodeling loans
- Personal loans for wedding expenses
- Personal loans for vacation
- To cover small business needs
- Increasing your educational opportunities
- Personal loans as an alternative to payday loans
- A loan for moving expenses
Let’s walk through the pros and cons of each scenario.
Debt consolidation loans
If you’ve carried a credit card balance, you know interest can add up! If you have debt you can’t pay off within a few months, personal loans for debt consolidation let you roll multiple loans into a single (often lower) payment.
For example, if you have a $2,000 balance on your credit card, a $5,000 high-interest car loan and $4,000 payment plan for emergency home repairs, you could consolidate these into one $11,000 personal loan.
The advantages can include one monthly payment and a lower interest rate than you’re paying now, which can save you hundreds of dollars each year.
Home remodeling loans
Whether you have a new house or a hundred-year-old character home, you may have big plans for making it your own. A personal loan for home remodeling is a great fit if you want to:
- Get a loan even if you don’t have much equity in your home.
- Avoid using your home as collateral.
- Fix urgent repairs like a broken heating system.
Personal loans for wedding expenses
With an average cost of almost $34,000, figuring out how to cover the cost of your wedding can be tricky, especially if unexpected costs have blown your budget.
The pros of using a personal loan for wedding expenses include:
- Faster funds when you’re mid-planning and other financial sources fall through.
- Fixed monthly payments with no hidden fees, if you work with a lender like Greater Alliance Federal Credit Union.
- A boost in your credit rating if you pay off the loan on time.
Personal loans for vacation
Is the beach calling your name? Dreaming of some quiet time in the mountains? When you find a travel deal you can’t pass up, personal loans for vacation can make your dream trip come true.
- Get quicker access to funds, so you can take the trip you’ve been putting off.
- Skip the worry of adding to credit card debt.
- Instead of emptying your savings, pay off your trip over a period of two or more years.
To cover small business needs
Although most personal loans are used for expenses that are, of course, personal, personal loans can often be used to launch or expand a small business as well. It even offers some advantages depending on the size of your business. Personal loans:
- Have an easier approval process.
- Allow you to get funds faster, as they require less paperwork.
- Frequently require no collateral, which means you don’t stand to lose your assets.
By contrast, a small business loan makes more sense when:
- You need more than $100,000 to launch or expand your business.
- You want the fiscal protections that come with keeping your business and personal finances separate.
Increasing your educational opportunities
Personal loans can also help you to get an education—especially when traditional school funding might not be possible. A personal loan:
- May provide a financial advantage, based on current interest rates.
- Can be used to pay for degree programs or other educational expenses not covered by traditional student loans.
- May help to fill gaps for unexpected educational expenses.
Personal loans as an alternative to payday loans
Short on cash? Payday loans can seem like the fastest fix. They’re simple-to-secure, high-interest, short-term loans that usually need to be paid off within 30 days—which is why it can be all too easy to fall into the trap of payday loans debt.
If you have unexpected emergencies to cover, consider an unsecured personal loan for:
- Much lower interest rates.
- More time to pay off the loan – usually about two years.
- A better chance your credit score will actually see a lift, if you pay it off on time.
- Fewer costs to you in the long run.
A loan for moving expenses
In a perfect world, you’ll always have time to plan and save for a move. In reality, there are sudden job opportunities and rental property sales that can mean a quick move. A personal loan can be a big help.
- Keep moving costs off credit cards. It can save hundreds or thousands in interest costs.
- Spare your emergency fund. Rather than dip into savings, pay moving costs back over a period of years.
- Secure a loan fast. This lets you take advantage of a job opportunity or cheaper living space in a high-rent area.
- Plan for the unexpected. Get money for your move and extra funds to cover any surprise costs.
A personal solution for life’s surprises
At Greater Alliance, we offer low personal loan rates, and the only fee we charge is a late fee. We can also provide faster approval than other bigger financial institutions, excellent customer service and a variety of loan options based on your needs.
If you’re looking for a way to fund that thrilling home remodel, your ongoing education, emergency expenses and more, contact us. We’re happy to walk you through your personal loan options and help you determine what financial moves are right for you.