If you’re like most people you’re probably reluctant to take out a personal loan because it puts you under an obligation to a third-party and you’ll lose money on the interest.
But while this is a good rule of thumb, it’s not something you should be rigid about. Since personal loans are unsecured, you don’t have to risk coming up with collateral, like your vehicle, for example. Additionally, personal loans can cost less than putting charges on a credit card.
There will be times when you can benefit immensely from taking out a personal loan, times when the advantages outweigh the disadvantages.
Here are some examples of when taking out a personal loan should work well for you:
Handling a personal emergency
Sometimes life can throw you a curveball. There you are, minding your own business, doing the best you can to be a conscientious, hardworking person when your car breaks down on the way to work! If you don’t have enough money in savings and you’re between paychecks, think of getting a personal loan.
Online instalment loans can help you get out of a difficult situation. For instance, if you need to pay for an emergency before you receive your paycheck. You can get as much as $1250. You’ll get the money quickly and repayment is flexible. In fact, all you’ll need is a social security number, a bank checking account, and a source of income. Of course, the checking account must be active and the source of income verifiable.
Building up credit
If you have good credit, it can help you buy things at a lower price than if you have bad credit. At other times, it can also make it possible for you to get access to resources that you would not be eligible for. And, in some cases, good credit is used by employers when you’re applying for a job – as a form of character validation.
A personal loan can help you pay off debt and build credit. This will have long-term benefits if you need to buy something that requires good credit. One way to do this is to use your personal loan for the purpose of debt consolidation.
Essentially, you’ll stop paying multiple bills, each of which is distressing your finances with small fees and penalties. Instead, you’ll transfer all your debts to a single account. This way you’ll streamline the whole process and always pay on time. Of course, for this to work, you’ll need to completely stop running up any balances on your credit cards.
Coping with unexpected health care costs
A personal loan can help if you need to cover a medical cost when your health insurance policy has a deductible and requires a co-payment. It can help with everything from routine medical or dental care to unplanned expense.
Preventing a bad situation from getting worse
If you have some unpaid bills that are going to collections, you need to do something immediately. By using a personal loan, you can avoid late payments or missing payments. You won’t risk having your unpaid accounts getting reported by your creditors to credit reporting agencies.
Covering an unexpected life event
If you must fly to visit a relative across the country because they are critically ill, a personal loan will quickly make this possible.
Saving your pet
What should you do if your dog comes home after having had a dogfight? With a personal loan, you’ll be able to take your dog to a veterinarian for immediate care.
Making an investment
Sometimes investment opportunities arise at the worst times—when you’re low on the funds to take advantage of them. By getting a personal loan, you might be able to take advantage of a financial opportunity that deserves be seized immediately.
Overall, it’s good to be conservative with your expenses and it’s great to have a savings account to take care of unexpected costs. But there at times, when you’re between paychecks and your savings are low, that a personal loan can help bridge the financial gap when you need money immediately.