You can use a personal loan for almost anything, so long as it’s within reason and follows the terms of your loan. For instance, you can’t use the loan for anything illegal, to gamble, or, in most cases, to pay for post-secondary education costs. What follows is a list of good reasons for obtaining a personal loan.
In 2019, Canadians had overall credit card balances of over $100 billion. While some of this amount is from the purchases they made, much of the debt results from interest and fees. Fortunately, you can use a personal loan in Canada for debt consolidation. Personal loans usually have lower interest rates compared to credit cards, especially if you have good credit. Using your personal loan, you can pay off the balance of your outstanding credit card debt and then make one monthly payment to your personal loan lender. This makes it much easier to manage your debt and is also cost-effective. This is why using a personal loan to consolidate debt is so popular.
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Sometimes things happen unexpectedly, and you need cash right away. For instance, you may need to cover the cost of medical bills, funeral expenses, an unexpected car repair, or pay a past due home or utility bill.
When emergencies happen, a personal loan is a convenient way to get the money you need quickly. Most lenders offer online applications that will tell you if you’ve been approved within minutes. As a result, you can get your money that day or within a few business days, depending on the lender.
Additionally, personal loans are a good alternative to payday loans. Payday loans are high-interest, short-term loans that usually require you to pay back the loan when you get your next paycheck. Personal loans, by contrast, are generally for a period of 2-4 years, with set monthly payments. However, payday loans don’t usually require a credit check, so many people think they’re the more straightforward method for obtaining a loan. While personal loans require that you have decent credit and the application is a bit more arduous, the benefit is that the interest rate is lower, and you have more time to pay back the loan.
Making improvements or repairs to your home can be pretty costly. If you own your home, you can use a home equity loan to pay for these improvements and repairs. However, this means using your home as collateral. If you’d rather not secure your loan with your home, then a personal loan is a good alternative for funding your home improvements and repairs. Additionally, personal loan funding tends to be a quicker process than that required to obtain a home equity loan, so you’ll get your money faster.
Although personal loans can be a great way to get cash when you’re in a tight spot, there are some instances where you shouldn’t borrow money. You should consider not getting a personal loan if:
● You can’t afford the monthly payments. Loans need to be paid back, and in general, this is done in monthly installments. The terms of your loan agreement will determine how much your monthly payment is. However, if you can’t afford this payment, you shouldn’t borrow the money.
● You don’t really need it. Personal loans shouldn’t be used for things like vacations. Vacations are not necessary purchases, and it would better serve you to save the money before booking your getaway.
● You have a better option available. If a home equity loan or line of credit offers you better terms, you should consider those loans over a personal loan.
When thinking about getting a personal loan, you must consider all your options first. Borrowing money comes with fees and interest payments that could end up landing you in debt if you can’t afford them. Therefore, getting a loan should be your last resort and shouldn’t be done on a whim. Instead, look at your financial situation closely before deciding to take out a personal loan.