When you think of personal loans, what comes to mind? You may think of payday loans, loans from a close friend or family member, or not be quite sure of what a personal loan is.
Simply put, personal loans are loans from financial institutions that can be used for a variety of reasons. Keep reading to learn more about four possible ways to use a personal loan.
To Cover Unexpected Expenses
We’ve all heard the saying that you should “save up for a rainy day,” but building a rainy day savings fund may not always be possible given your unique financial situation, or the amount in that fund may not be enough to cover those rainy day expenses when they come.
From an automobile accident that requires a deductible payment and a purchase of a new vehicle to large medical bills, unexpected expenses can occur out of the blue at any time and add up quickly.
Personal loans may be a good way to cover these unexpected expenses by getting you the cash you need quickly and allowing you to pay back your lender over time once you are through your “rainy days.”
To Cover Home Upgrades
If your home is in need of a little TLC or an immediate upgrade like a new heating system prior to winter, personal loans may help give you the cash you need to make these upgrades a reality.
Using personal loans to cover home upgrades can be a financial alternative to dipping into your savings account, using a home equity line of credit loan, or moving into a new home altogether.
To Cover Big-Ticket Items
With the holiday season right around the corner and travel restrictions easing in many places, you may find yourself wanting to purchase big-ticket items like new electronics or a family vacation.
While your normal monthly budget may not cover these expenses that are more of a “want” than a “need,” if you apply for and are approved for a personal loan, this loan may help make your “wants” a reality this holiday season or any month that you could use a little extra cash on hand.
To Refinance an Existing Personal Loan
If you already have a personal loan that you are working to pay off, some lenders will allow you to take out a new personal loan to refinance an existing loan. This may be a good option if your original personal loan has a higher rate than the personal loan you are applying for because by refinancing your personal loan at a lower interest rate, you could save money and even pay off the personal loan quicker. Also, if your credit score has improved since taking out the initial personal loan, this may help qualify you for a better personal loan rate.
Many factors impact the interest rate that you can get on a personal loan like your credit score, the amount of money the personal loan is for, and the time period in which you plan to have the loan, so comparing rates and shopping around for the personal loan lender that is best for you is always a good first step to take no matter which one of the ways to use a personal loan you plan to use.
Interested in a personal loan? Apply today!
It can be challenging to balance your savings, loans, and other accounts all in one place. However, we offer many ways to help manage your finances at Camino Federal Credit Union through online banking and mobile banking app. Please give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us online at caminofcu.org for more information.