What Is a Personal Loan and Why Might You Want One?

Blog Post03/07/2019
Life Events
What Is a Personal Loan and Why Might You Want One?

Learn all about personal loans: what they are, how they usually work and why they might help you.

What Is a Personal Loan?

Simply put, a personal loan typically provides up-front cash and is usually paid back at a fixed interest rate with equal monthly payments. Unlike mortgages, car loans or student loans, personal loans need not be used for a specific purpose.

Why Might You Want a Personal Loan?

Personal loans can be used for a variety of purposes, but they typically fall under 2 categories: financing existing debt and financing new expenses.

If you have debt, you could use a personal loan to:

  • Consolidate debt. If you have several different loans, it may be in your interest to consolidate them into one, simple personal loan.
  • Take advantage of a lower rate. A personal loan may offer you a lower rate than one you’re paying on an existing personal loan or other kind of debt

If you don’t have debt, a personal loan may still come in handy for:

  • Paying for a planned (or unplanned) expense. If you’re planning something big, like a home renovation project, and don’t quite have enough saved up, a personal loan can provide a good way to get started sooner. Of course, sometimes unplanned expenses pop up, like a big medical bill or necessary home repair. A personal loan can help there, too.

When considering a personal loan, be sure to research potential lenders and closely review the loan terms before you take action.

