When Should You Get a Personal Loan and How

Article about When Should You Get a Personal Loan and How

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Rumzz Bajwa activities: Business Development/Sales, Finance, Investor Relations/Marketing, Finance, Investor Relations/Marketing

May 1, 2021

Personal loans are helpful if you need extra cash for big-ticket purchases, like home improvements, consolidate high-interest debt, or emergency expenses. Aside from expensive buys, the funds from a personal loan can be used for almost anything.

When applying for personal loans, some lenders ask what you intend to do with the money. But most just want to know for sure that you’re capable of repaying the loan. You can repay the loan in fixed monthly increments over the course of months or a few years, depending on how diligent you are in making payments. 

Taking out a loan is a huge decision, so in this article, we’ll help you navigate the ins and outs of getting a personal loan.

When Should You Get a Loan?

It’s important to carefully consider your situation before you take out a loan. Personal loans are one of the best options to finance large purchases and other projects you can’t afford to pay for upfront.

Here are some of the reasons why you should consider getting a personal loan:

Home Improvement Projects and Big Purchases

You can use the funds from a personal loan or a 1000 dollar loan for big purchases that are too expensive to purchase out of pocket, such as buying new appliances, home renovations, or other major expenses. These purchases can put a dent in your savings, so taking out a personal loan can help you fund these projects.

Emergency Cash

Funeral costs, medical bills, and other unforeseen expenses come when you least expect them. You can use a personal loan to pay for costs that need immediate attention. Most lending companies conduct their application process online. It’ll only take a few minutes to complete the application forms, and you’ll be able to receive the funds within a day or two, depending on the lending company.

Vehicle Financing

Vehicles are expensive to purchase upfront. A personal loan is an effective way to cover the costs of buying a car, RV, or boat. The funds from the loan allow you to purchase vehicles without draining your savings. 

Debt Consolidation

Debt consolidation is the most popular reason for applying for personal loans. You use the funds to pay off other debt and combine those outstanding balances into a single monthly payment. Grouping your debts makes it easier for you to budget your money and set a time frame to pay off your balances without getting too overwhelmed.

Fund Freelancing Career

More and more people are now leaving the 9-to-5 to freelance full-time and make it a long-term career. Freelance work promises good compensation, but not getting paid on time is quite common among freelancers. Since freelancers face irregularities in income, a personal loan is one of the best ways to finance your freelancing career. You can use it to invest in a laptop, stable internet connection, training, and other expenses involved in switching to a freelancing career.

How to Apply for a Personal Loan

When applying for a personal loan, it’s important to compare several lenders to find the best rates for you. You can start with your bank and then check out credit unions, online lenders, and other banks. Some lenders allow you to prequalify for a loan, so you’re able to see interest rates and terms before you apply. Similar to interest rates, you should also consider the terms and fees that come with the loan.

Once you’ve found a lending company that works for you, you can fill out their application forms with your personal information, loan details, and other important documents that verify your ability to repay the loan. Bear in mind that this may result in a hard credit inquiry.

The application process for most lenders is quick and seamless. After submitting the required documents, you’ll likely receive the funds within days.

Should You Get a Personal Loan?

Personal loans are a great idea if you need a lump sum of cash to pay for expensive yet necessary purchases. Interest rates for personal loans are relatively lower compared to credit cards, especially if your credit score is high.

But like other major decisions, it’s best to weigh the pros and cons before applying. At the end of the day, taking on a personal loan means taking on more debt. Make sure you’re able to repay the loan on time, which means you might be making monthly payments for a few years. Evaluate your finances and see whether you’re able to make the payments, plus interest.


Articles authored by Rumzz Bajwa