1. Debt Consolidation
This is one of the best reasons to choose a personal loan. If you have many different loans out with different interest rates, you can probably save money by consolidating them into one loan. Shaving even a few percentage points of of your rate can have a huge impact on the amount of interest that you pay over the course of a loan.
Another advantage to debt consolidation is that you combine multiple payments into one. This can make paying your bills much easier. Write one check a month instead of four or five.
Depending on the types of loans you have, you might have further savings with a consolidation loan. A debt consolidation loan would be an unsecured loan and as such, the lender would have no claim on your property. This means that you would be free to sell the property and you would also not be required to carry expensive insurance policies.
2. Paying For Memorable Events
Normally, taking out a loan for something non tangible like a vacation or trip is not advisable. There is an exception though. Something that will create a lasting memory like a wedding could be a good use of a personal loan.
An average wedding in 2018 has increased to $44,000, according to Brides.Com. That is a huge chunk of change to come up with. Without a personal loan, couples could be forced to save for years to pay for a wedding or to make huge sacrifices. Hopefully, this will be the only wedding the couple has so they should make the most of it and a personal loan can help.
Besides weddings, there are other occasions where you might want to take out a loan to pay for an event. This could be a quinceanera, graduation or just about anything that you think will only happen once.
3. Home Improvement
Home improvement projects are expensive, especially if you want to do them the right way. A very basic kitchen remodel by itself can start at $20,000. This is not an area that you want to skimp on if you want it done right and you want it to add value to your home.
If you want to pay for this on your own, you would have to dip into your savings or borrow from their home equity. A personal loan could be much simpler to acquire than a cash out refinance or even a home equity loan in many cases.
The best thing about using the loan for a home improvement project is that you are financing something that will add value to your home. As much as 95% of what you spend could be added to the value of your home because of the update.
4. Paying Off Credit Cards
The average rate of interest for a credit card is 17% but you could be paying as much as 29% if you have credit card loans with bad credit. Take out a personal loan and pay off all of those credit cards and you will save considerable money. If you lower your rate to even 10% interest, you could cut out half of the interest that you would have otherwise had to pay. In addition, because of the lower interest rate, you can get out of debt much faster.
Just remember, when you pay those credit cards off, only close the ones with annual fees. Keep the others open but do not use them. The increase in available credit will give you a boost to your credit score.
5. Medical Bills
Even with health insurance, a sudden illness could prove costly. Not all bills may be covered and you could wind up with a pile of debt. A personal loan could keep you out of collections and provide you with an affordable payment that your budget can handle.
In addition to paying off medical debt that you have incurred, a personal loan can help you pay for treatments that you need. Some elective surgery requires you to put money down before it happens. This could be a knee replacement, tendon surgery, a spinal fusion or even dental work. Since these are not emergency situations, hospitals will usually require prepayment. A personal loan can help you do that.
6. Funeral Bills
A funeral can cost between $7000 and $9000 on average. This figure is often on the low end because funeral homes really know how to get the money out of you. In addition, the cost above does not even include the cemetery plot.
Loans can be put to good use to pay for a funeral for several reasons. For one, the stress of coming up with the money is the last thing that someone should deal with when they lose their loved one. In addition, it can help prevent any guilt in the future because with the right amount of money, mourners can be left with a feeling that they did the right thing. You only get one chance to celebrate someones life.
7. Start A Home Business
If going out on your own has been a life long dream, a personal loan could help. It takes a lot of capital to start your own business and having to nickel and dime everything at the beginning can really hurt your chances of success.
With a loan for as little as $10,000, you could start a very successful home business. The only question is what do you want to do. Do you want to go into web design, interior decorating, lawn care, carpet cleaning? The sky is the limit.