Are you considering taking out a personal loan but unsure if you can use it how you want? Personal loans can be used for a variety of purposes, here is a breakdown of the most common uses. The most popular personal loan is the unsecured personal loan. This option gives the borrower the ability to use these funds in the ways that work best for them.
Let’s begin with how much you might be able to borrow. The max amount you can borrow depends on a few factors, your FICO score, and your average annual income. These factors impact the total loan amount and interest rate that you can qualify for from your lender. The better they are the better interest rate you can qualify for and the larger the loan you can borrow. Most unsecured personal loans can be a max of up to $25,000 and secured personal loans can be up to 90% of the collateral’s value. *
So, what can you use that money on? Pretty much anything you need to use it on. As long as you can pay back the loan amount with your current financial situation, you get to decide what to use it on. You can use it for necessary repairs on your home, to pay for a wedding, adopt a new furry family member, pay for medical bills, go on a vacation, or even turn your hobby into something more. Here are some of the main uses for a personal loan.
Debt consolidation is one of the main reasons individuals will take out a personal loan. It is a great way to consolidate high interest debt and pay it down quicker. However, you need to make sure you don’t accrue more high interest debt while you are paying off your loan.
Unexpected Medical Bills
You never know what is going to happen day-to-day. When unexpected medical bills arise and insurance does not cover the full amount, you might need a personal loan to cover the difference. When you are confronted with a large medical bill, check first to see if the medical provider offers a lower interest payment plan option. If they don’t offer any kind of payment plan a personal loan can be the best financial option to cover the difference.
Many people will use a personal loan to go on a dream vacation or to cover holiday gifts. If you saw a great deal on flights to a location you have always dreamed of going to, a personal loan can help you get there. Personal loans can be a great way of allowing you to go when the deal strikes and pay it back later. It also can be a good option for those who have trouble saving for holiday gifts but are diligent at paying their loans. However, it is always best to try and save for these expenses in advance if you can, to prevent the need to pay interest.
Personal loans are a great option for that unexpected home repair, such as a leaky roof or water heater repair. They are great for immediate necessary repairs because they typically only take a few days to close, while a Home Equity Line of Credit (HELOC) loan could take a few weeks. If you have the time to wait for something such as home updates or landscaping taking out a HELOC might be a better option. This is due to the lower interest rates and longer terms that HELOCs can offer. However, when you don’t have the time to put something off for a few weeks, personal loans are a great option to help you bring the gap in finances.
Before applying for a Personal loan, be sure to talk with a financial professional to go through all your options. It is important to make sure you get the best option for you that improves your financial situation and future.
If you have a question about applying for a personal loan or want to talk with one of our financial professionals check out our website alltrustcu.org or stop by one of our branches today!
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*The current Annual Percentage Rate (APR) on a Personal Loan is 5.99%, is accurate as of 09/13/2021, is based on credit score and may vary. Rate shown reflects a credit score of 700 or greater with automatic payment from an Alltrust Credit Union checking account. $5 Regular Savings required. Subject to credit approval. Rates may change at any time without notice.