There are a few instances when I’d say that a personal loan is the solution to someones money problem. There are a few situations when someone needs money and a personal loan just might be the right answer. Let me first say that these situations are few and far between and that taking out more loans is rarely the answer. But in some cases it might be the smart thing to do.
If you think you may need a personal loan after reading this post then consider using Avant. Avant operates in 47 states and has a good record providing personal loans from $1,000 to $35,000. Here are some of the benefits of using Avant to find a personal loan.
- No early pre-payment fees
- Funded loans as fast as 24hrs – up to 3 days
- Loan amounts from $1-$35k
- APRs from 9.95% – 36.00%
- BBB Accredited with a “A” rating
A Personal Loan Is OK When…
You have multiple maxed out credit cards
If this situation sounds familiar then you’re not alone. There are a lot of people who carry a large amount of credit card debt. There are many families with over $30,000 in credit card debt. Thats actually more than half the income of an average family. The interest on this amount of credit card debit is staggering. A 20% interest rate on $30,000 in credit card debt amounts to $6,000 in interest expense alone each year.
In situations like this taking our a personal loan might be an answer. Use the personal loan to pay off some or all of that credit card debt and then put those credit cards on ice. Keep your monthly payments the same and watch your debt start to drop much faster.
You have a financial emergency
Having an emergency fund is a luxury for many families. Rather than use a credit card to help fund an emergency a personal loan may be a better solution. Personal loans usually carry a lower interest rate and this makes it preferable to credit cards.
If a financial emergency were to happen then consider using a personal loan rather than maxing out a credit card. The interest rate on your credit card will make it much harder to pay down.
You’re stuck in a payday loan cycle
Its so incredibly easy to get stuck in a payday loan cycle. For those who’ve never been in a payday loan cycle its when you start with one payday loan that gets rolled over after two weeks. Because its hard to come up with the money to pay off a payday loan in just two weeks this is a very common thing to do. You get trapped in a cycle when you find yourself rolling over the payday loan every… single… time. The interest & fees quickly double or triple the original loan until it becomes impossible to pay off.
You know its gotten really bad you can find yourself taking out multiple payday loans from different places and using one to payoff the other.
In this situation a personal loan can help break the cycle. A personal loan can help spread the cost over a few years. This longer ‘amortization’ of the loan helps decrease the size of the payments. Along with a lower interest rate this makes a personal loan much easier to manage.
Personal Loans Can Be Good Financial Tool
Personal loans can be a good financial tool in certain circumstances. For the most part personal loans carry higher interest rates than a line of credit or a mortgage. But if a personal loan can help you avoid even higher interest debt like credit cards or payday loans then its a great tool to help gain control of your finances. Plus, as I mentioned earlier, if you use Avant to fund your loan you can get money in as little as 24hrs.
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