You can use a personal loan for several purposes. The loan repayment period will vary depending on the financial institution and your ability to clear the loan. Most personal loans that I have borrowed in the past were repayable within 2 to 6 years. After applying for a personal loan, you will receive a lump sum in your account. Depending on the lender, you will get the money within a few weeks or even days. You will then make consistent monthly payments throughout the loan term.
You may opt to borrow a secured or a non-secured loan. I can’t recommend one loan type over the other because the ideal loan will depend on your unique financial situation. If you opt to go for a secured loan, you will provide collateral, usually your home or property. The lender could seize the collateral if you fail to repay the loan. I always prefer unsecured personal loans over secured loans due to their fast processing time and convenience. However, you must have an impeccable credit score for you to qualify for an unsecured personal loan.
Undoubtedly, there are several reasons why you may obtain a personal loan. I have compiled a list of the main purposes of personal loans.
You may apply for a personal loan and use it to repay other multiple loans or credit cards. Debt consolidation allows you to combine all outstanding loans into one monthly payment. After clearing previous debts, you will only have to pay one installment. I would recommend a debt consolidation if you are struggling to repay multiple loan installments every month, leaving you feeling overwhelmed.
I would opt for a debt consolidation any time, especially if the personal loan has a lower interest rate than my other loans. If you apply for a personal loan and clear your credit card debts, you will repay the loans at a lower interest rate and probably within a shorter period.
I apply for a personal loan whenever I have unexpected or emergency expenses. For instance, if you face a medical emergency, you may apply for a personal loan. Other common emergencies that may prompt you to apply for a personal loan include pest infestations, accidents, or injuries. The good thing about personal loans is their short processing times. I can access a loan within a short period, making it an ideal way to cover unexpected expenses.
You can use a personal loan to purchase an asset like a vehicle and other machinery. I have seen people buy assets like private jets or recreational boats using personal loans. When you need to make a significant purchase, you may not have all the money at your disposal. I usually prefer to take a personal loan when making substantial purchases instead of depleting my emergency fund or savings.
Maybe you have been longing to go for a vacation, but you can’t seem to save enough money for it. Why not consider a personal loan to meet your vacation expenses? If I’m set to go for a vacation, I don’t like to have anything come in the way. A personal loan can help you visit your dream destination.
I would consider a personal loan if I want to make renovations in my home, but I don’t have enough money. Some of the common remodeling projects include kitchen remodels, bathroom remodels, solar panel installation, or new roof installation. In all these cases, it’s likely that you’ll need to call for professional help. Things like installing solar panels or updating the electric system of the house can’t and ideally shouldn’t be handled by you or your family, as they can be hazardous. You might want to keep some professionals at hand (like the providers on this page) for the different aspects of home renovation. But paying for professional services, especially when there’s tons of work to be done, can weigh considerably on your pocket. Next time you want to finance a small or medium-sized home renovation, you should consider a personal loan.
You can use a personal loan for almost anything and not just the purposes outlined above. However, remember that even if a personal loan is easy to access, it’s still a loan and must be paid back. I always remind myself of this to ensure that whenever I apply for a personal loan, I use it responsibly.