Sometimes the road takes an unexpected turn: Are you ready to deal with it?
While many loans have very specific purposes, sometimes you need a more flexible loan that you can use for those unique situations in your life – from exciting new plans to unexpected emergencies. Personal loans are smaller loans designed for individual borrowers who need money for unusual circumstances where a more traditional loan may not work.
Is It Right For You?
If you need money for a smaller project, then a personal loan can be a potential solution. We're not talking about buying a house or starting a new company – personal loans work well for smaller scenarios, like covering an expensive vet bill, financing a move to another state, or even taking control of your financial life by paying off higher interest debt. If you are considering a situation like this, reach out to lenders and discuss your needs to see what type of personal loan could work for you.
Pros and ConsPros:
-They can be used for many different purposes. A personal loan does not have a designated purpose like a mortgage or an auto. They can be used for many different situations that come up in life.
-They are often unsecured. While "unsecured" doesn't sound like a positive at first, this simply means that they rarely require collateral, which can make personal loans have a relatively easier applying process. Note that this does not mean that you can default without consequence – just that the approval process is typically faster and simpler.Cons:
-Repayment can be strict. Interest rates may be higher than the rates on other loans, and repayment dates are often short term. We're not talking "payday loan" short, but most personal loans need to be paid off within a couple of years.
-There are limits on the amount of money you can borrow. You can't get the same amount of money you would for a mortgage, for example. Amounts can vary, but many personal loans tend to be only a few thousand dollars and aren't suitable for large expenses.
What Else Should I Know About Personal Loans?
Your credit is very, very important when considering personal loans. This means that people with good credit may be able to borrow more on a personal loan or arrange for better terms. If you are looking for the right personal loan, take a look at a variety of lenders before making your decision. Certain organizations, like credit unions, may be able to offer ideal personal loans because of their nonprofit status and interest in helping individual borrowers – but they also tend to offer smaller loans than other institutions.