3 Uses for Personal Loans

Many types of loans, such as home loans, student loans, and car loans, stipulate that you use the borrowed money for a specific purpose. Personal loans, however, come with no such stipulation and allow you to use the borrowed funds for almost anything. Here are three ways you may want to use a personal loan.

1. Refinance Other Loans

You can use a personal loan to refinance one or more other loans that you already have. In this situation, you’d take out a personal loan for the same amount as the debt that you want to refinance. The money from the personal loan is then used to pay off the debt, and you’re left with only the personal loan to pay each month.

On the surface, taking a loan out to pay off another loan might seem redundant. However, you may want to consider this action in a few different situations.

First, many people do this so they can consolidate multiple loans into a single one. This reduces the number of monthly payments they have to submit, and it simply makes managing bills a little easier. If you’re disorganized and struggle to keep track of bills’ due dates, this reason alone may justify consolidation.

Second, people sometimes are able to lower the interest rate they pay by transferring outstanding debt to a personal loan. This can be especially effective if you have high-interest credit card debt or applied for a loan previously when your credit score was low. Even a slight decrease in your interest rate can result in substantial savings over the length of a loan.

Third, people occasionally refinance their debt with a personal loan to lower their monthly payments. Moving debt from a short-term loan to a personal loan that has a longer period can provide a significant reduction in monthly payments. If you struggle to balance your budget each month, a lower payment will ease your cash flow issues.

2. Survive Tough Financial Times

Almost everyone faces a financial emergency from time to time and needs cash quick. If you’re experiencing a financial hardship and don’t have a way to earn money through working, the funds from a personal loan can be used to cover bill payments, make copays, or cover a large expense.

Because personal loans don’t have use stipulations, you can get through almost any financial hardship with a loan. Whether your vehicle suddenly dies, you have to undergo surgery, or you lose your job, the funds are helpful in all of these situations.

Moreover, personal loans are especially useful if you’re faced with an immediate monetary emergency. Many personal loans make funds available within a day, which is a faster timeframe than what some other lending options provide. For example, securing a home equity line of credit can take 14 to 28 days — which isn’t too useful if you need money in a day or two.

3. Pay for Once-in-a-Lifetime Vacations

Ideally, you want to pay for a vacation with cash, but that’s not always realistic. In some situations, it’s better to go on a vacation now and pay the expense off later.

The money that a personal loan provides can be spent on fun activities, such as vacations. You may use the funds to pay for transportation, lodging, meals, activities, and even souvenirs.

If you have a chance to travel abroad, attend a friend’s destination wedding, or take the family on one last trip before your children go to college, you might not have time to save up for the trip. A personal loan lets you have these experiences and memories when you have a chance to.

To talk to loan professionals and secure a personal loan, contact Liberty Lending Group.

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