What to use Personal Loans for
What can you use a personal loan for? Well borrowers can use a personal loan for pretty much anything.
Why Take a Personal Loan
Personal loans were once used for large purchases like home appliances. Now though even though these purchases are to large to be covered by one months paycheck they can still be paid off quickly due to financing options on offer or payments can be spread out over a credit card.
A personal loan is then used for:
- Debt consolidation – if you not able to get a secured loan then a personal loan can be used to consolidate debt with a lower interest rate than a credit card.
- A Wedding – weddings can be expensive and many couples and parents will take out a personal loan to pay for this.
- A vacation – a large vacation can be paid for through a personal loan.
Combining with Credit Cards
One reason that a personal loan could be taken is to take advantage of the benefits that are offered by credit card companies and retailors.
For instance you may want to pay down your credit card balance and transfer them to an account that has a 0% rate for up to 18 months and then pay off as much as possible in that time. At the end of the term though the rate will increase. It might be a wise move to pay the remaining balance with a personal loan that has a lower interest rate.
There are also retailors that offer 0% financing for a certain time, but if the balance is not repaid on time then interest rate will start. Consumers can avoid this by transferring the balance to a personal loan before the end of the term.
Consumers might also use their credit cards to make expensive purchases to take advantage of the rewards programs. However, the interest rate that is on the rewards cards is often higher than other credit cards. The balance could then be paid off using a personal loan.