7 Reasons Personal Loans May Be The Best Choice For You
When everyday people are faced with rising expenses that strain their finances, their quality of life can be significantly impacted. Many people suffer an injury, work-related setback, health issue, or get hit with unexpected expenses that threaten to drain their retirement funds and savings accounts. There are also times when a personal loan can be used to make things a little better for yourself and your loved ones. A Personal Loan from Peach State can provide the finances you need to help change your life in meaningful ways.
What Is A Personal Loan?
A personal loan, is a type of borrowed money from a lender (like your credit union) that typically allows people to make purchases and consolidate debt, often beyond the cash they may have on hand. Personal loans are usually paid back with interest in fixed monthly installments. Borrowers typically repay the loan over a six month to four year term.
Personal loans are typically determined by credit scores and are not tied to collateral such as a car or home. Because personal loans can be used for a wide range of purposes and usually have a fast process, borrowers can put the money to work right away.
1. Use Personal Loans For Credit Card Consolidation
The average American struggles with more than $7,000 in revolving credit card debt. Recent reports indicate that approximately 63 percent of people polled feel they are worse off financially than a year ago. Many people point to lost jobs or lower wages, among other factors that negatively impacted their financial health.
One of the problematic aspects of carrying credit card debt with high-interest rates is that it creates a debilitating drain on income. Paying monthly minimums never seems to make a dent in credit card debt because the interest keeps accumulating. Securing a personal loan to pay off the cards and consolidate the debt can be an effective way to improve your financial wellness. Use Peach State’s Credit Card Payoff Calculator to see what it will take to pay off your credit card balance!
2. Use Personal Loans For Debt Consolidation
It’s not uncommon for working families to accumulate debt for a variety of reasons. These may include loans for automobiles, recreation, and unexpected expenditures. What often occurs is that hard-working people get overwhelmed with multiple monthly payments. As people sink further into debt and start missing payments, a lower credit score can result.
By transferring multiple debts into one monthly payment, borrowers can often reduce the overall interest rates and take advantage of one manageable amount. Consolidating debt this way means that you can establish a specific timeline when all of your debt will be paid off. If your long-term goal is to be debt-free, consolidation through a personal loan may be the right solution for you. If you are considering taking out a personal loan for debt consolidation, check out Peach State’s Personal Debt Consolidation Calculator!
3. Complete Home Improvement Projects With Personal Loans
When new homeowners require upgrades or repairs, lending institutions often want you to secure a loan against equity. This can be problematic for recent homebuyers or those who have a mortgage that is currently underwater. Everyone wants to enjoy their living space regardless of their financial situation.
That’s why many people apply for personal loans to make home improvements. A newly remodeled kitchen, deck, patio, bathroom, or another room for a family member on the way isn’t discretionary spending. These and other home improvements are necessary for you to fully enjoy your home.
4. Use Personal Loans To Pay Off Existing Medical Expenses
While some lenders offer medical loans to help cover unexpected medical expenses or elective procedures that insurance does not cover, consider comparing their proposed interest rate to that of a Peach State Personal Loan.
Personal loans do not require collateral, which means they consider your credit score, past payment history and average monthly income to determine your interest rate. They provide the money you need quickly and typically offer much lower interest rates than the alternatives – a bad credit loan or payday loan.
5. Personal Loans Can Help Pay For Large Unexpected Expenses
To say that life is unpredictable would be something of an understatement. While we all hope for financial stability in the future, no one knows when they may get hit by an unexpected bill. Maybe the heating system in your home breaks down or the expected financial aid for your child’s college tuition fell short, or maybe your beloved family pet requires emergency surgery. Although responsible people do their best to save and plan for the future, sometimes we all get caught off guard.
When large, unexpected expenses come up, it is rarely a good idea to take money from your 401(k) or drain your savings accounts. Smart money management through a short- or long-term personal loan can be integrated into your monthly budget by making a few changes. Consider having a barbecue on the weekend instead of dining at expensive restaurants or review your current budget to determine what is an unnecessary expenditure that can be cut temporarily. A personal loan allows you to meet the challenges that costly unexpected expenditures create without going backward on your journey to financial success and long-term prosperity.
6. Extra Money for Weddings, Vacation, or a Splurge!
There are times in life when people can put a little extra money to good use. Imagine helping to make your child’s wedding absolutely perfect. Consider taking that once-in-a-lifetime vacation, or just splurging on an important anniversary, holiday, graduation, or another special occasion. These are the events in our lives that form priceless, lasting memories. You will remember those days long after the personal loan is paid off.
7. Personal Loans Can Actually Boost Your Credit
It may seem counterintuitive, but taking on modest debt from a personal loan can improve your credit score. Although some people try to avoid taking on loans, credit reports calculate income-to-debt ratios as well as repayment history, among other factors. If you are hesitant to borrow, these are ways personal loans may help improve credit scores.
Improve Credit Diversity:
A robust financial portfolio can help increase credit scores. When people have manageable credit card payments, auto loans, mortgages, and other types of loans, their scores are typically enhanced. If you do not have a diverse credit history, adding a personal loan to the mix could prove valuable.
Build Repayment History:
Consistent loan repayments help demonstrate that you are a low risk for lending institutions. Because personal loans offer fixed, monthly repayment plans over several years, they represent the very definition of steady repayment.
When borrowers leverage a personal loan to bring multiple debts under one payment, they have an opportunity to minimize credit utilization. As the personal loan gets paid down, you can also reduce your debt-to-income ratio.
We Can Help!
Poor credit ratings can be challenging. A personal loan from your credit union could put you back on the path to a good rating with less risk. If you have filed for bankruptcy or feel you credit score won’t qualify for a personal loan, please ask us for help. We are happy to try to help you find the solution that is best for your needs!