If you’re facing an unexpected car repair, a job opportunity across the country, or a great deal on a dream vacation, you may need to come up with money fast.
While you could use a credit card, a 401(k) loan, or tap into your home’s equity, there may be a better way: apply for a personal loan.
What is a personal loan?
Personal loans are a form of credit you take out from a bank, credit union, or online lender. They tend to be installment loans, where you make monthly payments and have a set repayment term. Personal loans are generally unsecured. That means you don’t have to put up a valuable like your home or car as collateral for the loan.
Personal loans can be used for a wide range of expenses, including:
1. Veterinary expenses
If you have a dog, cat, bird, or other companion animal, you know that your pets are like family. But unfortunately, pets can become seriously ill or injured and require medical care. Depending on your pet’s needs, your vet bill may cost thousands of dollars.
While you could use a credit card to cover the cost, taking out a personal loan can give you the money you need at a much lower interest rate.
2. Medical bills
If you recently had a medical emergency, you could end up owing your hospital or healthcare provider a lot of money. According to Healthcare.gov, the average cost of a three-day hospital stay is about $30,000. Even if you have excellent health insurance, you could be on the hook for your deductible or out-of-network costs.
Using a personal loan to pay for your medical bills that weren’t covered by insurance is a smart way to spread your payments out, making them more affordable.
3. Home renovations
If your home is a bit dated, investing in renovations can make your house more livable and even increase its value. Personal loans can be a great way to finance home repairs like updating kitchen cabinets, retiling the bathroom, or switching out appliances.
4. Wedding arrangements
Weddings are notoriously expensive. In fact, the average wedding costs $33,931, according to The Knot.
Whether you’re a parent who's planning on giving your child a dream wedding or you're footing the bill for your own, applying for a personal loan may be a smarter strategy than raiding your retirement fund or tapping into home equity.
If you’ve always fantasized about seeing Paris or the pyramids of Egypt, taking out a low interest personal loan can make your dream a reality. Going into debt for travel isn’t ideal, but it’s a better choice than using high-interest credit cards to finance your goals.
6. Starting a business
Whether you have an idea worthy of Shark Tank or are simply expanding your side hustle, a personal loan can help you get your business off the ground. You can use your loan to buy essential startup supplies, like equipment and inventory.
If you have good credit, you’re more likely to qualify for a personal loan than a business loan as a new company.
7. Adoption expenses
If you’re planning on adopting a child, you may have to pay thousands of dollars in fees.
With a personal loan, you can have several years to repay it, making your payments more affordable and your dream of becoming a parent a reality.
8. Funeral arrangements
Planning a funeral for a loved one can be incredibly expensive. Unfortunately, not everyone is financially prepared to handle the cost, especially if the death was sudden or unexpected, or if your loved didn't have adequate insurance.
Using a personal loan is a good way to finance the arrangements and relieve some stress during an emotional time. Plus, it's usually a more cost-effective option than funeral-specific loans.
9. Debt consolidation
If you have high-interest debt, consider using a personal loan to consolidate your credit card debt. Because personal loans have lower interest rates than credit cards, you’ll save money over the length of your repayment.
Plus, using a personal loan to pay off your credit cards can also boost your credit score because it lowers your credit utilization.
See our picks for best deals on debt consolidation loans.
10. Moving expenses
If you’re moving to a new city, it can cost you thousands. According to HireAHelper, the average full-service move costs $2,568.
Using a personal loan rather than a credit card to pay for moving expenses can help you save money. Even better, you’ll have a set payoff date.
Applying for a personal loan
Personal loans are a flexible form of credit, giving you the money you need for whatever expenses you face.
If you decide that a personal loan is right for you, we suggest checking out Citizens Bank. We like them for their fast approvals, interest rate discounts, and quick cash disbursement.