Paying off debt at lower rates with a personal loan has advantages as well as some downsides. It’s always a good idea to avoid debt when possible, but sometimes life can offer an opportunity or get in the way of plans.
Maybe you’re facing a financial emergency, such as a job loss or health issue. Perhaps you need to cover a major expense and your savings account just won’t cut it. Perhaps you have the opportunity to save money on a major purchase or take a trip of a lifetime. No matter the reason, you’d rather not rack up expensive credit card debt. Fortunately, a personal loan from a reputable community bank lender can be a low-cost solution when you need to borrow money.
Here are five examples of the ways to use loan money: debt consolidation, home improvement, vacation, paying bills, and home purchases from furniture to appliances.
1) Debt Consolidation
In addition to carrying a lower interest rate than credit cards, sometimes, it’s helpful to just pay one payment every month on all of your debt. Taking out a personal loan allows you to pay off a wide variety of smaller debt and consolidate it into one monthly payment and save money in the process. If you’re having trouble managing all your debt with various interest rates, a personal loan might streamline the process and reduce your interest rate. Oftentimes, you can pay off your debt sooner by consolidating it into one loan, and with a loan that potentially has a lower interest rate.
2) Home Improvement
If you’re having trouble affording remodeling, repairs, or improvements on your home, a personal loan can give you the money you need. That said, you might be better saving this option only for truly necessary repairs. If a project cost more than you anticipated, personal loans can cover things for which you didn’t plan or expect.
Every few years, you may want to take a vacation to some fabulous destination, but sometimes when you try to save money it seems like something more important always comes up and eats into your vacation savings. Taking out a personal loan for a vacation means you can pull together the money you need for your vacation and pay it back in small, monthly increments. Taking out a personal loan will save you from the higher interest on credit cards. But, make sure you have the repayment plan set up in a way that you will pay it back in a reasonable time period.
4) Pay Bills
Sometimes it’s a good idea since inconsistent income might mean you’re paying rent and other bills late. A personal loan or line-of-credit can give you a bit more regularity.
You can use a personal loan for nearly anything, including rent or bills that are paid monthly. However, you’ll never want to become reliant on personal loans to pay bills. It’s best to use this option to get you through a short-term financial challenge.
5) Purchase Home Goods, Furniture and Computers
You might want to splurge on a new bed or redecorate your living room. Having a personal loan gives you more options to get what you want rather than what your bank account allows, but it comes at a price. A personal loan can help if you need something immediately, such as a mattress or computer. It can also cover that trip of a lifetime that all of a sudden is available to you. Having the discipline to repay your loan in a short period of time makes this option a nice opportunity.
Learn more about the advantages of working with your local community bank to get approval for a personal loan. Talk to one of our loan experts at Chelsea State Bank. Call our office today: (734) 475- 4210.