If you find yourself short of cash and don’t want to add on to your credit card debt, a personal loan through a commercial lender provides a viable alternative way to help you get things done when you lack the cash resources to otherwise do so. Of course, you need to make sure your prospective lender is reputable and the loan terms won’t put undue stress on your financial stability.
Types of Personal Loans
As you enter the marketplace looking for a lender, it would help for you to understand there are three ways to qualify. If your credit score and payment history are in reasonably good standing, you might be able to qualify for an unsecured personal loan. If your overall credit situation is marginal at best, you have two alternatives. The first would be to offer collateral for a secured personal loan. If you lack sufficient collateral, your lender might be willing to accept you application with a credit-worthy cosigner.
Five Ways A Personal Loan Can Help You
If you are going to risk your overall debt situation by taking out a personal loan, you want to make sure the proceeds are intended to help you in some meaningful way. Here are some suggested ways that a personal loan can help you.
1. – Improve Your Credit Score – If your credit score needs a boost, a personal loan could be very helpful. Due to the high rates found on credit cards, it would certainly be a preferred way to bottom money so long as you have the resources to make all your payments on a timely basis.
2. – Provide Capital for a Business Venture – As an entrepreneur, you may be aware of how difficult it is to raise capital to start a business. If you have a reasonable expectation that your business venture will be successful sooner rather than later, a personal loan is a great way to raise short-term capital.
3. – Pay for Medical Emergencies In the case of a medical emergency, you may need cash in a hurry. Personal loans usually have a short application and approval period, making them a viable way to raise cash in a reasonable short period of time.
4. – Purchase a Home – If you’re able to qualify for a home loan but lack the required down payment, you might be able to secure a personal loan to raise the necessary funds. Before you broach this option, you need to make sure it doesn’t affect your ability to qualify for the mortgage.
5. – Cover Educational Costs – While there may be better alternatives, a personal loan is certainly a viable way to raise funds to pay for educational costs. Given the short-term nature of this type of loan, you want to be sure you will be able to stay up with payments while attending school.
For the most part, your ability to secure a personal loan depends on your credit history and perceived integrity. They aren’t necessarily for everyone, but a personal loan offers an alternative way to raise cash when the need is short-term and your ability to repay is reasonable.