Smart Reasons To Take Out A Personal Loan

Smart Reasons To Take Out A Personal Loan

I talk a lot about ways to save money, sharing money-saving tips, including ways to smartly spend your money. However, we don’t talk enough about credit, and when is the right time to have a credit card, take out a mortgage, etc. While I won’t call myself an expert, I have a lot of experience of bumping my head and making financial mistakes. Over the years, I’ve worked hard to pay in cash for everything. However, there was a time in my life where I had to take out a personal loan. Many frugal people cringe at the word loan and take it personally. I cringed at the word when I first heard it as well. However, it saved me from a big financial mess.

When I was in my early 20’s, I did something stupid. I traded in my paid-for-with-cash-car for a newer model and a car payment. At the time it seemed like a pretty cool thing to do, right? Wrong. But, I didn’t stop there. In less than six months later, I traded that car in for a truck. Then in another six months or so, I traded the truck in for a small jeep. Each time I traded in the vehicle, the difference of the loan was lumped into my next car loan, and my payment went up. I’m sure you can imagine what came next. I was also in school at this time and my hours at work decreased. I could no longer continue to pay for this car loan, which was worth more than the car. My options were limited. I could try to refinance the car, trade it in for a cheaper car, or continue to figure out a way to pay for this loan each month. Broken, frustrated and financially wiped out, I received some financial advice from my credit union and lender. They advised me to sell the car, take the difference of the loan and roll it into a personal loan. I didn’t like the sound of this. However, it was my mess, and I needed to clean it up.

I didn’t know this at the time, but debt consolidation is the primary use for personal loans. My credit union came up with a plan on how I could pay off the personal loan quickly, and gave me pointers on how it would help boost my credit score. At the time, I had no clue about personal loans and some of the benefits of taking out a personal loan.

I don’t recommend taking out a personal loan for miscellaneous reasons, but during this time of my life, that personal life was a lifesaver. I didn’t want to keep the jeep due to continuous car maintenance issues, and the value of the car vs. the amount of the loan were my main two reasons for getting rid of it. For those who are looking to improve their financial situation in general, there are some truly smart reasons to take out a personal loan. Even if you are attempting to avoid or even eliminate debt, a personal loan can still be an excellent choice for your finances.

Smart Reasons to Take Out a Personal Loan

They allow you to consolidate debt. If you are working toward paying off a debt of any kind, you may find yourself stuck in the trap of insanely high-interest rates that cause it to feel impossible. With Discover Personal Loans, you can find fixed interest rates with flexible repayment terms. In fact, fixed interest rates start at only 6.99% up to 24.99%. If  you qualify a  lower interest rate, you may find it to your benefit to consolidating other debt like credit cards, auto loans, into a personal loan with the lower fixed interest rate and flexible repayment terms. With Discover Personal Loans, if you pay off the loan within 30 days, you will owe no interest. That’s a great opportunity for a short-term loan for something like a down payment on a car, an appliance upgrade, or a roof repair that you know you need immediately but wouldn’t have funds for until later in the month. Another reason to consider a personal loan is if you have HIGH-interest credit cards. If you are paying higher-interest  credit cards, consolidating those debts into a personal loan with a fixed rate starting at 6.99% up to 24.99% is not only a smarter way to go but will save you more money in the long run. Having that extra cash in your pocket will allow you to build your savings account, have money to travel, pay cash for your car, etc. See, a personal loan can be a good thing!

If you still are not sure about a personal loan or have questions about whether it’s right for you, I encourage you to watch this video on what is a personal loan. A personal loan is not always a bad choice for your finances. In fact, it can be greatly beneficial to  helping you get rid of debt faster . For me, I was able to find a clear way out of the mess I created. By consolidating the difference of the loan from the Jeep, I was able to go on to gain financial freedom from a debt weighing me down. Being able to focus your finances for a long healthy debt free future is great, but sometimes that includes taking on short-term debt that helps you manage that better future faster and easier.

{thank goodness I don’t have to rely on a bike as my main mode of transportation}

Is a personal loan something you are considering? Leave me a comment below letting me know (it’s okay if this is not the direction of your financial path).

You can check out the debt consolidation calculator tool and the personal loan calculator tool, and you can visit Discovery Personal Loans on Facebook, Twitter and YouTube!

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