There are many ways people use personal loans to improve their financial situation. From consolidating debt to freeing up cash, Oportun has tips anyone can use to make personal loans work to their advantage.
Improve a credit score
Improving one’s credit score by using a personal loan can be a creative way to grow their finances. Using a personal loan to pay off debts and bundle debt payments into a single monthly payment could help someone pay debts off faster. Making all payments on time and in full will reflect well on their credit score, too.
Pay for a major life event
Another common way to use personal loans is to pay for a major expense without putting strain on other financial goals. This could include a wedding or home renovations. By using a personal loan to finance these expenses, a person can avoid putting purchases on a high-interest credit card. Over time, this should help save them from interest charges.
Invest in oneself
Someone can also use personal loans to invest in themselves. This could include things like taking a professional development course. Investing in oneself is a great way to improve finances and can be a smart way to use a loan to improve future financial prospects.
Fund a major purchase
When a person takes out a personal loan to finance a large purchase, it can help them spread out the cost over time and avoid putting the cost on a credit card. Using a personal loan to buy a new washing machine or refrigerator, for example, can help them avoid high credit card interest rates. This should also save them money and help them stay within their budget.
As long as a person has a solid plan for using the loan and repaying it, this can be a smart way to finance larger lifestyle purchase.
One of the most common ways people use personal loans is to consolidate debt. By taking out a loan to pay off multiple high-interest debts, they can not only save money on interest charges, but also reduce the number of bills they must keep track of each month.
Get a lower interest rate on other loans
If someone has good credit, they may be able to take out a personal loan with a lower interest rate than they’re currently paying on other debts. This could help a person manage their current debt(s) and get out of debt faster.
In case of emergencies
Unexpected medical or dental bills, car repairs, or home repairs are realities everyone faces at some point. Taking out a personal loan can give someone peace of mind, maybe even saving them from clearing out their savings.
There are many ways to use personal loans to improve personal finances. If someone is considering taking out a loan, they need to be sure to shop around for lenders who will give them competitive interest rates and terms so they can be sure they’re getting the best deal. They should also make sure they have a solid plan for how they will use the loan and repay it.
Personal loans can be a great way to improve one’s financial situation when used strategically. Explore loan options available through Oportun.