REASONS TO GET A PERSONAL LOAN IN U.S
A SITUATION WHERE ROBERGE RECOMMENDS A PERSONAL LOAN IS IF YOU HAVE CREDIT CARD DEBT WITH HIGH INTEREST RATES. PAYING OFF DEBT WITH A HIGH INTEREST RATE, SUCH AS A 24 PERCENT ANNUAL PERCENTAGE RATE, CAN BE DIFFICULT BECAUSE THE MORE INTEREST YOU OWE, THE HIGHER YOUR PAYMENTS WILL BE AND THE LONGER IT COULD TAKE YOU TO BE DEBT-FREE. BUT IF YOU QUALIFY FOR A PERSONAL LOAN WITH A MUCH LOWER INTEREST RATE, YOU CAN PAY OFF THE DEBT FASTER AND SPEND LESS ON INTEREST.
PERSONAL LOANS ARE NOT A SOLUTION FOR MOST FINANCIAL SITUATIONS, SAYS ERIC ROBERGE, CERTIFIED FINANCIAL PLANNER AND OWNER OF FINANCIAL PLANNING WEBSITE BEYOND YOUR HAMMOCK. “MOST TIMES, THEY ARE JUST A BAND-AID ON IMPROPER MONEY MANAGEMENT,” HE SAYS.
“ONE BAD REASON TO TAKE OUT A PERSONAL LOAN IS TO INVEST IN THE STOCK MARKET,” HE SAYS. “THERE IS NO REASON TO GO INTO DEBT JUST TO GET MONEY IN THE MARKET. SAVE AND THEN INVEST.”
PERSONAL LOANS ARE ALSO NOT A GOOD IDEA FOR HOME REPAIRS. IT’S USUALLY BETTER TO USE THE EQUITY BUILT UP IN YOUR HOME, SINCE SECURED LOANS USUALLY HAVE LOWER INTEREST RATES.
SOME OF THE WORST USES FOR PERSONAL LOANS ARE VACATIONS, WEDDINGS, ENGAGEMENT RINGS AND OTHER UNNECESSARY EXPENSES. IF YOU’RE HAVING TROUBLE SAVING FOR AN EXPENSE LIKE A WEDDING OR VACATION, DELAYING IT UNTIL YOU CAN PAY FOR IT IN CASH IS A BETTER OPTION THAN A PERSONAL LOAN.