A personal loan calculator can help you determine exactly how much money you need to borrow, depending on the interest rate and other variables involved. Before using one of the calculators, however, you should know the top nine reasons why people choose to take out personal loans rather than another type of loan. That way, you can have more control over the parameters that go into your calculation so that it provides you with an accurate snapshot of what your monthly payments will look like and how long it will take you to pay off your loan in full.
1) Paying off high-interest debt
One of the biggest reasons people take out personal loans is to pay off high-interest debt. High-interest credit cards and other revolving debt are extremely difficult to get rid of. Even if you don’t plan on applying for a loan, it’s important to know that a personal loan can be used to consolidate your debts, reduce your interest rate and pay off your debt faster.
2) Buying a car
Buying a car is a huge investment, which is why most people need to take out a loan. Since your car will likely be one of your biggest purchases in life, it’s important to understand what you’re getting into before you agree to any terms. There are many types of loans that come with different terms and rates, but knowing what type of loan you qualify for gives you an idea of whether or not you can comfortably afford it.
3) Buying a house
People often turn to personal loans when buying a house. But there are other, equally good reasons for applying for them. So if you’re not sure whether or not you need one, check out our guide below to find out if it makes sense for you. The best way to see what your loan options are is by taking advantage of a free and easy home loan calculator. This will allow you to compare rates from different banks so that you can make an informed decision about which one offers you better value.
4) Fixing your home
When you decide to purchase a new home, one of your biggest expenses maybe fixing it up to your liking. It might seem like an impossible task to afford major repairs when you’re up against a strict budget, but a personal loan can help significantly by enabling you to get more out of your money. With a home loan calculator and personal loan calculator, you can determine how much money you need and figure out how much interest you’ll pay over time.
5) Going back to school
In some cases, you may not be able to cover tuition costs through grants and scholarships alone. If that’s your situation, it may make sense to consider a personal loan. Personal loans are relatively simple loans—you don’t need to apply with a cosigner or any other requirements like you would with a mortgage or student loan. With your bank, credit union, or lender of choice, you can get set up within minutes and approved in 24 hours or less.
6) Medical bills
Medical bills are one of the most common reasons people take out personal loans. What’s more, they account for nearly 60% of personal loan borrowing according to LendingTree. Many medical treatments are expensive, and if you find yourself in a position where you need them but can’t afford them on your own (or with insurance), it may be time to seek financing.
7) Credit card debt consolidation
Credit card debt consolidation is one of your best options to get out of credit card debt. You can take out a personal loan from a bank or a credit union and pay off all your credit cards with it. This can lower your interest rate by paying off high-interest credit cards and using a new, low-interest loan to pay them off. Consolidating also makes it easier to keep track of payments since you have just one bill each month.
8) Investing in a business
As a small business owner, you are likely to need a bit of extra cash here and there. And while personal loans aren’t ideal, they might be your best option. When considering how to finance your business, compare business loan options with personal loans to find out which will give you the money you need at a lower cost. In most cases, it will be cheaper to get an unsecured personal loan rather than a business line of credit—or worse yet, borrowing from friends or family!
9) Any reason you can think of!
#1 – Your credit cards are maxed out.
#2 – You want to refinance your car loan to a lower interest rate.
#3 – You have an emergency expense that needs to be paid right away, but you can’t quite get there with your monthly budget.
Personal loans are quickly becoming one of today’s most popular financial products. Consumers are using them to pay off high-interest credit card balances, finance a new car, and take care of other expenses they can’t afford to delay. But with so many companies offering personal loans, it can be difficult to figure out which loan is right for you—especially if you don’t have enough information about different loan types and features.
