When you need to borrow money for a significant purchase, it’s usually pretty clear which type of loan is the right one. If you need to pay for educational expenses, you get a student loan. If you need to borrow for a new car, you get an auto loan. When it’s time to buy a home, you get a mortgage.
But what about personal loans? While they may not be as cut and dry as other loan types, personal loans can be just as important when it comes to managing your finances.
What is a personal loan and what can I use it for?
Basically, a personal loan is money you borrow for any kind of personal use. Upgrading your appliances, taking a summer vacation, paying for unplanned medical expenses – or planned wedding expenses – are just a few examples of when it might make sense to get a personal loan.
Another way to use a personal loan is to consolidate debt you’ve already incurred – usually in the form of high-interest credit cards. Consolidating high-interest balances into one monthly payment can be a smart way to pay off unwanted debt sooner. Use our debt consolidation calculator to see how much you could save.
Before you buy, consider a personal loan
When you need to make a big purchase there are many financing options to choose from. Before you swipe (or insert, depending on the terminal) that high-interest credit card or opt for expensive in-store financing, it’s worth the time to explore the possibility of a personal loan for your borrowing needs. With flexible financing options and competitive interest rates available for almost any need, there’s a good chance it will turn out to be a better way to borrow.