Most of us know that debt is rarely a good thing. The majority of financial gurus will tell you to avoid borrowing money as much as possible to limit interest payments and accruing debt.
However, reality dictates the occasional need for things like credit cards, mortgages, car loans, and personal loans. It’s one of the most accepted financial facts. Just as importantly, if you are a responsible borrower, taking out a loan will actually improve your credit score over time.
The question is, what are the reasons to get a personal loan? Are some reasons more practical and acceptable than others?
Ultimately, it comes down to you, your financial situation, and your circumstances. However, we can provide a little insight. Keep reading for the most common reasons consumers take out personal loans.
1. Furnishing a New House
One of the most common reasons to get a personal loan is to furnish a new home. When we move into a new home, it’s only natural to want to furnish it with new stuff. If it’s your first home or apartment, this is more of a necessity than a luxury.
Taking out a personal loan is a quick and easy way to get the funds you need to get furniture, decor, electronics, dishware, and everything else you need for your new home. A personal loan from a bank will have favorable terms compared to in-house financing offers by retail stores.
2. Paying for an Elective Surgery
While most of us have decent health insurance coverage, most policies don’t cover elective surgeries or procedures. This is one of the more disheartening financial facts. Unless you were involved in an accident, most cosmetic surgeries are not included in your health insurance plan.
Therefore, if you want a nose job, hair transplant, breast enhancement, or any other type of elective procedure, taking out a personal loan might be your only option for funding the operation.
3. Consolidating Debt
One of the best reasons to get a personal loan is if you’re using it to consolidate your debt. For example, you can take out a personal debt consolidation loan to absorb multiple debts with high-interest rates.
Not only will you decrease how much money you’re paying out in interest, but your monthly payment will probably be lower as well. This is a good step to take if you’re trying to get better control over your finances. One lower payment with less interest is far better than multiple payments with high interest.
4. Paying for Emergency Vet Bills
Most pet owners go above and beyond to care for their animals. This includes making sure they’re fit and healthy. Sadly, however, you can never foresee potential accidents or keep them from happening.
You might need quick cash to pay for emergency vet bills if your dog or cat was hit by a vehicle. They might also break a bone, get cancer, or have any number of ailments.
If you have pet insurance, you might be okay. Otherwise, taking out a personal loan will be your best option.
5. Making Home Improvements
Homeowners spend thousands of dollars each year updating their homes and making renovations. One of the most alarming financial facts is that homeowners spent an average of $9,000 on home improvements in 2018.
To pay for these renovations, you can take out a personal loan, which is ideal for one-time expenses. Some homeowners, use a HELOC (home equity line of credit) because it’s a revolving account. However, that might not be a good option if you have trouble with impulse decisions.
6. Paying for Vehicle Repairs
Why seek a personal loan? What about paying for vehicle repairs?
There are several good reasons for a personal loan, but paying for emergency vehicle repairs is one of the best. After all, we rely on our car for getting us to work, taking our kids to school, getting groceries, going to the doctor, and more.
If you don’t have a reliable vehicle, it’s a huge inconvenience. Therefore, taking out a personal loan to pay for emergency vehicle repairs is more than acceptable (and quite common).
7. Paying for a Vacation
Did you know that 63% of Americans live paycheck to paycheck? At the end of each month, they’re just scraping by. However, that doesn’t mean they don’t deserve a vacation for working hard all year long.
While it’s important for people in these circumstances to reevaluate their spending habits to create a positive cash flow, taking out a personal loan for a much-needed vacation isn’t a bad idea. It can help you relax and recenter yourself to come back swinging.
8. Medical Expenses
America is one of the greatest countries in the world, there’s no doubt about it. However, one area in which we are lacking is our healthcare system. We have great healthcare, it’s just not very affordable.
Many Americans can’t afford high-quality health insurance. As a result, they end up with extravagant medical bills when they get sick, injured, or are otherwise unhealthy. This is one of the more unfortunate financial facts.
Using a personal loan to pay for emergency medical expenses might make all the difference.
9. New Appliances
Finally, one of the most exciting reasons to get a personal loan is to update your home with new appliances. This might be necessary if your current appliances are failing or because you’re ready for a change.
Regardless, a personal loan can help you get the funds you need now to replace your old fridge, stove, dishwasher, washer, dryer, HVAC unit, or water heater. All new kitchen appliances can revitalize your kitchen and make meal prep a breeze.
The alternative is financing your appliances through the retail store. They may offer incredible deals, like 0% financing for the first 18 months. However, once that time has expired, you’ll probably have ridiculous interest rates, which will make it difficult to pay off the loan.
Looking for More Financial Facts and Advice?
As you can see, there are countless reasons to get a personal loan and plenty of financial facts to back up your decision. Just make sure you do your homework and plan ahead to avoid financial stress in the future.
And if you’re looking for more consumer advice or financial tips, stick around for a while. Read through some of our other articles to find more helpful content.