A credit card is a valuable tool when you need money in a pinch. But if you’ll need a little time to pay it back, it’s probably not the right financial tool for you. Getting a personal loan is a way better idea if you’re borrowing larger amounts of money that you won’t be able to pay back immediately. Here are three good reasons to use a personal loan, and three reasons that aren’t so great…
GOOD – Investing in your home: Whether you’ve got an expensive repair that needs to be made, or you just want to redo your kitchen, spending money on your home doesn’t usually come cheap. A personal loan will allow you to up the value on your home and provide you a monthly payment that you easily handle.
BAD – Family vacation: If you don’t have the money you need to take your family on vacation, the last thing you want to do is go into debt just to make it happen. Staycations can actually be more relaxing than vacations, so save your money and by next summer maybe you’ll be ready to book that trip to the beach.
GOOD – High-interest debt: Credit card debt can be hard to get out from under. If you’re dealing with debt on multiple credit cards, you may be in trouble. A personal loan with a fixed monthly payment can be a great option for you if you’re dealing with a mountain of debt that seems impossible to climb.
BAD – Investing: No matter how good you are at investing, it’s still a little like gambling. There are no guarantees when it comes to investing, so don’t put yourself into debt for something that may just end up putting you even further into debt.
GOOD – Starting a small business: You’ve been dreaming about opening up your own business. Good for you. Follow your dreams and make it happen. Startup costs can be expensive and this is a great reason to get a personal loan.
BAD – Weddings: Weddings can be super cheap or super expensive. If you can afford a pricey wedding, good for you. But if you don’t have the funds for your dream wedding, do you really want to start off your new life together with a shiny new pile of debt?