Monday, February 20, 2017

Personal Loans: The Swiss Army Knife Of Personal Finance


There's that old saying, "There's no such thing as a free lunch." Turns out, it's not just lunches that aren't free. Pretty much everything costs money, and it's often more than you'd expect it to be.

You can easily plan and save for some expenses, while some come up out of nowhere. For those things, you need to borrow, and a great way to borrow is with a personal loan. Consider these uses for a personal loan. If you have one of these events coming up, you may want to consider a personal loan to finance them. 

1.) Weddings 

Love knows no season. When the time is right to get married, it doesn't matter if a few more months of saving would make a difference. Timing is everything! If you or your child is dedicated to hosting a spring wedding, it's just not possible to pay for it with a Christmas bonus.

The average wedding costs just over $30,000, which makes it too much for a single credit card, and the interest you'd pay would make it incredibly more expensive. Even single vendor costs, like event space or catering, may require separate financing. A personal loan will net you a better repayment plan and a better interest rate.

You may even be able to bring the price of those transactions down. Rather than putting a deposit down with a credit card, you can offer to pay more of the total cost up front in exchange for a reduced bill. Caterers, tailors and other small business owners are likely to appreciate the simplification of their cash flow. They can pay their employees and purchase supplies without going into debt themselves. They may be willing to pass those savings on to you. 

2.) Adoption 

Adopting a child is a fantastic way to show your love to the next generation. It can also be very expensive due to screenings and fees that stand between you and your child. Realistically, costs could be as high as $50,000 to adopt a child in the US, and even more to adopt an infant from overseas.

Obtaining financing for this process can be very difficult. Unlike traditional big expenses, there's no collateral. No one can repossess your child if you fall behind on your loans. Traditional sources of financing are out the window.

Fortunately, a personal loan can make this process a reality. Because the terms tend to be short, you can have your loan paid off long before you start thinking about college costs for your new bundle of joy! 

3.) Short-term house sales 

The success of shows like "Love it or List it" and other fast-paced remodeling displays has inspired a new generation of people to pick up properties, fix them up and sell them for a profit. For those who are handy and love remodeling, it can be a dream hobby. It can even turn into a full-time job! There's just one problem: capital.

When you buy a house to sell again, it's likely that you're borrowing as much as you can to pay for the property. That doesn't leave much left over for new fixtures, paint, or repairs. Some of that can be done cheaply enough, but much of it will require capital. Since you don't have much equity in the property, borrowing against it isn't a real possibility.

A personal loan can be the answer. With affordable rates and flexible repayment terms, a personal loan can help you finance those value-boosting improvements. Best of all, when you sell the house, you can repay the personal loan early without a penalty! 

4.) Launching a small business 

They say all you need to make it is a great idea. That's about half right. What you really need is a great idea and enough money to get it off the ground. Even the most thrifty of business owners will still face start-up costs in materials, license fees and equipment purchases. While these costs may not be much, it will be a while before your business turns enough profit to recoup these expenses.

A personal loan can broaden your timeline to profitability. Rather than being pressured to start turning a profit immediately, you can take your time and develop the business. Since your debt servicing is a fixed cost throughout the course of the loan, it's easy to plan for repayment. You can give your business the boost it needs to get firmly established, setting you up for future prosperity. 

5.) Extra education expenses 

Depending on your personal financial situation, your student loans may be insufficient to cover the actual whole cost of your education. Sure, you can get loans to cover tuition, but what about books or a computer to handle schoolwork? If you're going back to school later in life, many traditional funding opportunities may not be open to you.

In these instances, taking out a personal loan to cover the extra costs of your education can be a life-saver. Instead of paying for those costs out of pocket or with a credit card, you can pay for them up front with a loan you can budget for going forward. Many parts of life as a student are unpredictable; it's nice to have one constant month-to-month. 

YOUR TURN: What would you do with a few extra thousand dollars? Would you fix up a car? Take a dream vacation? Cover an unexpected bill? Let us know how you'd use a personal loan!

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