The thing about life is it’s never certain. One moment you may feel like you have everything sorted out, but the next, you’re facing a financial emergency. With bills to pay, such as mortgage payments, auto loans, student loans, this financial emergency may leave you feeling the pinch. However, you’re not alone.
Almost half of adult Americans have auto loan debt, and while you may or may not be one of these adults, the statistics still go to show that most Americans have outstanding debts to pay. And those debts aren’t inexpensive. If you’re in a situation where you’re feeling a financial strain, a personal loan may be your best option for helping to relieve that strain. Let’s look at three common scenarios in the average American’s life, and see how a loan can help reduce the strain.
Consolidate Your Credit Cards
If you’re like most Americans, you have a credit card or two. Credit cards are a handy way of paying for things when you don’t have the money upfront, but overspending on credit cards is a dangerous habit to fall into, and a tricky one to escape. Utilizing a loan to pay off credit card debts not only gives you a sense of relief, but consolidating all your payments can actually help lower the interest rate you’re paying. By doing a little research between banks, you can shop around for a personal loan with an interest rate that’s actually lower than the rate on your credit card payments. You’ll also just have to make one payment on the loan instead of multiple payments across several different credit card companies.
Consider an Alternative to Financing
Making a big purchase, such as furniture, cars, electronic devices and more, is usually a necessity. You may be able to put off getting a new couch for another month or two, but sooner or later that old ratty couch won’t hold up. This is why so many companies offer financing directly through their company. It gives their customers options to complete their purchase without dropping deeply into debt, but company financing usually comes with a high interest rate. A personal loan may be a better alternative to company financing, as paying upfront with cash gets you out of having to finance. Personal loans may have a much lower interest rate, putting more money back in your pocket as you enjoy your new purchase.
Personal Loans May Improve Your Credit Score
The funny thing about loans is having one is actually a good move for your credit score. No one wants to be in debt forever, but making payments on loans demonstrates your ability to make payments on time, thus improving your score. And if you’ve never taken a loan out before, having this new type of payment reflected on your score helps add a variety of payments to your overall score.
A personal loan can be a great solution for several financial situations. If you find yourself in a pinch because of some unexpected expenses, or you have a big purchase to make, consider the value of getting a personal loan. It may give you the boost in finances you need while allowing you to save a little money on the overall cost of some big ticket expenses.