Most of us have experienced seasons in our lives when money was tight. We may have had student loans that were due, a mortgage, or even rent that we were worrying about paying. Most of us don’t look forward to creating more debt, even though we may need the money and be struggling to make ends meet. In fact, ends may not be meeting which leads us to look for alternatives to solving our financial shortages. Many people run away from the thought of taking out a personal loan. However, there are times when a personal loan is one of the smartest moves you can make when it comes to solving your financial crisis. A recent study of loanry has uncovered at least four situations that make a loan is a good idea.
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When the Interest on a Debt is Higher than Loan Interest…
If you have a debt that is accruing interest aggressively. In other words, if you are trying to pay off a debt with a high-interest rate, a personal loan may be a good idea if the interest rate on the loan is significantly lower than your existing interest. You actually look to save money by taking out a loan. How much money you save will depend on the amount of your debt, and, of course, the actual interest rate. However, this is a situation where a personal loan may be a good idea. This is one of the examples, according to There are plenty of times, where a loan is a smart, and even money-saving, move.
When You’re Trying to Buy or Pay for a Major Event or Item
Weddings are generally expensive events. They require extensive planning and even more extensive budgeting. Most of us don’t have money on hand to finance an event this expensive. This is an expensive event that may be a good reason to look into taking out a loan. If you can acquire a low-interest loan, it may be worth your while and may keep you from going broke for one special day. Most newlyweds want to be able to live comfortably after the wedding. Few of us want to be stuck eating Ramen noodles for moths as we struggle to pay off a wedding. A loan can take the edge off of this expensive event and give a couple time to slowly but steadily pay off the debt. Studies have found that weddings are a major life event that many newlyweds go into debt over. A loan can often help couples manage the debt without ruining their credit or running their pockets dry.
To Consolidate Credit Cards
It’s not uncommon for many of us to get into trouble when it comes to credit cards. This can be especially scary if we have more than one, and some have exorbitant interest rates. Credit card debt is something that many people struggle with. Many of us don’t exercise enough restraint when we have access to credit that exceeds our actual cash flow. Sometimes, the best way to solve a credit card crisis is to take out a loan and pay down or pay off your existing credit card debt. This is a good idea if the interest rate on your loan is lower than the interest rates on your credit cards. This isn’t unusual at all, unfortunately. Many credit cards carry high-interest rates and annual fees that can make getting out of credit card debt seem almost impossible. However, being savvy enough to invest in a personal loan can reduce the amount of money you spend paying off your credit card debt and save your credit.
To Re-Fi Student Loans
If you have a student loan or loans with a variable interest rate or a high-interest rate, a personal loan may save you a lot of money and stabilize your payments. Yes, even the interest rates on student loans can be a little high, adding to your educational debt the longer you have it. A student loan can cut down on the amount of money you end up paying back by reducing the amount of interest you are paying. This is particularly true when it comes to high-interest student loans. Also, student loans with variable interest rates make planning your payments a little tricky. If the interest rate is subject to change, there’s no telling what you’re going to be paying from one month to the next or however frequently the interest rates change. Investing in a personal loan can stabilize your payments and reduce the amount of interest you end up paying back.
A recent study of loanry determined that many post grads are struggling with student loan debt. Often, this is one of the biggest debts postgrads still have to pay off. As a result, a student loan can save your credit standing, stabilize your payments, and possibly save you money via a lower interest rate. Loans aren’t always a bad idea. If they are acquired for the right reasons, they can be beneficial in reducing debt and helping you to solve your financial shortfalls.
