Practically anything can be funded by a personal loan. While some lenders may inquire as to your intended use for the funds, others may only be concerned with verifying your ability to repay it. Personal loans aren’t cheap, but they can be a good option in a number of situations. Here’s how to determine which is best for you.
- Credit card debt consolidation
Getting a personal loan to pay off your high-interest credit cards could help you save money if you have a sizable debt on one or more of them. You don’t have to take out a personal loan, though. If you qualify, you might instead be able to move your balances to a different credit card with a reduced interest rate. For an extended promotional term of six months or more, some balance transfer offers even waive the interest.
- Repaying other debts with a high interest rate
A personal loan costs more than certain other forms of loans, but it isn’t always the most expensive. A payday loan, for instance, is probably going to have a far higher interest rate than a personal loan from a bank. Similarly, switching to a new loan instead of an older one that has a higher interest rate than you would be eligible for today could help you save money. Be important to first confirm whether there are any application or origination costs for the new loan as well as any prepayment penalties on the previous loan before proceeding.
- Obtaining Finance for a Major Purchase or Home Improvement
A personal loan might be more affordable than financing via the seller or charging the bill to a credit card if you’re installing new appliances, replacing a furnace, or making another significant purchase. A home equity loan or home equity line of credit, on the other hand, can be even less expensive if you have any home equity built up. You will be risking your home because those are both secured loans.
- Funding a Significant Life Event
Such with any significant purchase, it may be less expensive to finance an expensive event, like a wedding or a huge milestone anniversary party, with a personal loan as opposed to a credit card. For the same reason, unless it’s the trip of a lifetime, borrowing money to pay for a vacation might not be the best choice.
In the right situations, personal loans might be helpful. However, they are not inexpensive, and frequently there are better options available. There are many banks that are good at personal loan in ang mo kio who will assist you in estimating the cost of one if you’re thinking about getting one.