At some point in everyone’s life, comes the need for more money. Either for fixing up what you already broke or to improve something that still works, a personal loan could help you get the cash you need.
And sure, they were made to help a financial situation and can save you from a lot of trouble (and paying high rates), but it’s important that you know exactly when it’s a good idea to get a personal loan and when it’s the best time to explore other options.
Use your personal loan for…
Personal stuff. Kind of obvious but sometimes we confuse what is or isn’t a personal thing so, this is what you could ask a personal loan for:
- Home improvement. To move or to renew your current spaces, as long as this upgrades are worth it and will function for longer than the term of your loan.
- Technology. Ah! But not the latest smartphone so you could be trendy. Well… you could use it for that, there is no restriction but it makes more sense to use it on something that will ‘pay for itself’ like a laptop for work.
- Holidays and vacations. Traveling can be expensive and, sure, no one wants to miss out on a chance to see the Eiffel Tower. Just try to get the best deal to really make the most of the money you’ll be paying far later than the trip.
- Emergencies. It doesn’t matter if it’s a twisted ankle or a broken pipe, you’ll need money to get it fixed. But you can always be a couple of steps ahead and have insurance to protect yourself from calamities.
- Taxes. Yeap, the terrible taxes. If you are not cautious, you could end up with a big amount to pay and no cash to do it.
You could but maybe try it other way first
There is one personal thing in a lot of people’s mind that can be resolved with a personal loan: debt. It doesn’t matter it’s form, either a student loan, a maxed out credit card or a hospital bill, all debts weigh on everyone’s mind.
And though the first recommendation when it comes to debt is that you shouldn’t go into more debt to pay off the first ones, sometimes it becomes a good choice. Having a single or consolidated debt can help you keep better track of payment due dates and balances, just have in mind:
- The rates of a consolidated debt should be cheaper than the original ones.
- Before paying them off, try to negotiate a better deal to ask for less money.
- You should cut off / cancel your previous lines of credit so you don’t end up raising them again.
- Never default on your payments. It could look really bad on your credit score.
Sometimes, a consolidated debt is not the best option, if you can negotiate with the separated entities to have a better deal. Before saying yes to a personal loan to pay off debt, explore your options and choose what’s best for you.
What you shouldn’t do with a personal loan…
Ok, right. A personal loan can be used for whatever you want. It’s “your” money and there are virtually no restrictions. But sometimes there are better financial products for what you need. If you are going to start a business and need working capital, you can always look for a small business loan like the ones Camino Financial offers, that are made specific for this.
You’ll see that the conditions like rates, payment installments and even customer services will be different. Explore your options and choose the right path for you, your financial goals and peace of mind.
Image Source: Unsplash
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