Personal loans are some of the most widely known types of loans. This type of loan is taken to finance expenditures at the borrower’s discretion and is repaid in fixed monthly instalments. In this article, we are going to look at some of the prominent ways that you can use a personal loan, from funding emergencies to financing a lavish wedding or vacation.
Medical bills
Healthcare in the United States can be very expensive. In 2017, the average expenditure on health in America was more than $10,000 per person. Without the financial means to cater for important medical procedures, some patients with debilitating conditions find themselves dying while waiting for treatment. Anecdotes of people being left with huge debts to hospitals for small procedures abound on the interwebs and news. A personal loan can bring much needed relief to you or a loved one who is constrained financially to clear medical bills. Since personal loans may take a considerable time to apply and get approved, they may be ineffective for time constrained medical procedures.
Consolidating debt
Holding many small debts, and especially credit card debt generally leads to exorbitant interest and fees payments. It makes great financial sense to consolidate them into a single repayment plan by taking a lower interest loan and paying them off instantly. That way, you are not only able to follow up more easily on your repayments but can make significant savings on your accrued principle. If you are able to get a personal loan from non-profit financiers or credit unions, you enjoy even greater benefits because their terms tend to be very friendly even to people with low credit ratings.
Paying for an event
Making your wedding into the memorable experience it is supposed to be or giving a loved one a deserving send-off will often set you back a good amount. Raising the money is not always possible, therefore you should consider taking a personal loan. As long as you are not overstretching yourself and won’t have to live with long-term debt, this route can be greatly convenient. It is important to ensure that the terms are not overly burdensome and that the amount you take on is serviceable through your existing income streams.
Home maintenance
Paying out of pocket for all home repairs, purchases and expansion is not always possible. In order to retain the value of your home and also maintain a comfortable living space for your family, you might need a personal loan that covers the expenses for home improvement. An unsecured personal loan has some advantages over regular home equity loans since they do not place your house at risk of being repossessed by the lender.
Funding a Vacation
A once-in-a-lifetime vacation to an exotic paradise like Bali, the Bahamas or the African wild is a dream for many lower and middle class Americans but putting the money together is not always easy. Although not always recommended by financial experts, a personal loan can give you the means to finance a memorable trip. You should ensure that your revenue streams are sufficient to repay the loan in a few months to avoid getting into a debt trap.
Vehicle purchase or maintenance
Although depreciating assets like vehicles are not always good value for money when purchased using credit, you might find yourself in a situation where you cannot survive without a car. In the absence of other financial streams, a personal loan can place the money in your hands fairly quickly. In some ways, a personal loan surpasses car loans, most importantly since the car is not attached as collateral. If you are looking to buy a car out of necessity and not just as a luxury, a personal loan may make a lot of sense.
Making tax payments
Getting in trouble with the IRS is an unpleasant experience that can bring your finances and life crashing down. If you have tax arrears that your current income is unable to cover, you might want to consider taking a personal loan to clear the full amount instantly. This returns you into the good books with the government while you repay the personal loan over a number of months. This approach may be more beneficial than using a payment plan offered by the IRS since the latter comes with substantial penalties.
Resources:
1. https://www.fool.com/the-ascent/personal-loans/articles/5-things-you-can-do-with-a-personal-loan/
2. https://www.supermoney.com/ways-to-use-personal-loan/
3. https://www.valuechampion.sg/best-and-worst-ways-use-personal-loan
4. https://www.imoney.my/articles/things-to-do-personal-loan
5. https://www.experian.com/blogs/ask-experian/what-can-a-personal-loan-be-used-for/
