Why Do I Need a Personal Loan? 7 Reasons They Can Help
April 30, 2019
The decision of whether or not you should take out a personal loan can be daunting. With many specific borrowing options available, from home to auto loans and more, it can be difficult to know why and when you should choose a personal loan. With that said, the U.S. has continued to see massive growth in the number of personal loan accounts, even just comparing Q1 2017 to Q1 2018.
So, does that strong growth in Americans taking out in in-store and online personal loans confirm your decision to take one out as well? Probably not. But we at Illinois Lending are here to help make your selection easier.
What is a personal loan?
As it states in its name, a personal loan can be used for a variety of personal reasons. Compared to auto loans where the loan goes toward, you guessed it, your car, a personal loan does not have a specific type of expense tied to it.
A personal loan is a type of installment loan, meaning you borrow a pre-determined amount of money and pay it back with interest in fixed monthly installments. The monthly installments run for the life of the loan, which can typically range from 12 to 84 months. A personal loan is also likely unsecured, allowing you to borrow without having to provide collateral, such as a house or certificate of deposit (CD). This can be extremely helpful to avoid home foreclosure if payments are missed.
Why should I take out a personal loan?
Taking out a personal loan is a smart decision when it is more affordable than other loan types or using your credit card to rack up balances. One important consideration is making sure you are able to pay off the monthly installments until the loan lifespan is complete. Otherwise, there will be additional fees to pay.
Additionally, banks and lenders offer personal loans with low-interest rates to those with good credit. Also, the loans themselves can be smaller in amount, making them an appealing choice to many.
When can a personal loan help me?
- Consolidating debt
A situation where taking out a personal loan is likely the most helpful is when working toward consolidating debt. Consolidating debt, or combining multiple debts into one payment, can cut down interest as well as make it easier for you to keep track of all debt needed to be paid off. By using a personal loan, you can receive lower interest rates than the interest tied to your existing debt.
- Financing a vacation
A personal loan can also help you take the vacation of your dreams. When trips get pricey, whether it’s a honeymoon or luxury experience, a personal loan is a great option for affording a big vacation you have in the works.
- Paying off credit cards
As we mentioned earlier, personal loans tend to have lower interest rates. That also includes lower interest rates in comparison to some credit cards. Utilizing a personal loan is an effective way to lower credit card debt and have lower interest at the same time.
- Assisting with wedding purchases
The big day is expensive. Larger wedding expenses, including the venue or wedding dress, can also be paid off with personal loans even if they all came from separate stores, companies, and vendors.
- Affording funeral costs
Unfortunately, the majority of those planning a funeral are unprepared. Personal loans can help you pay for a funeral for your loved one when you need it most.
- Refinancing student loans
Refinancing your student loans with a personal loan can also allow you to have lower interest rates. Additionally, you can consolidate your student loans into one payment, have a fixed interest rate and repayment period, and can release your cosigner from your loans.
- Settling medical bills
Lastly, paying for medical bills is another top reason why customers take out personal loans. This can be a strong alternative to running up credit card bills from procedures and medicines.
Want to apply for a personal loan?
With Illinois Lending, you can easily apply for and receive personal loans regardless of your credit score situation. Send in your application online through our secure portal or submit the necessary documents in person and receive your check the same day.