Personal loan option availability is higher than ever before. In a matter of minutes, people have the chance to apply for a personal loan to get hundreds if not thousands of dollars into their bank account. It almost seems too good to be true.
There are many reasons why a personal loan might be a good option for you. Whether you need to pay for an unexpected expense, consolidate your debt, or make a large purchase, a personal loan can help you achieve your financial goals more quickly and easily. However, they aren’t for everyone, and Dutton Lending wants to make their customers smarter before starting.
Knowing the advantages and disadvantages of using a personal loan is the right start. Below is a breakdown of the good and the bad.
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Advantages and Best Uses of an Online Personal Loan
One of the main advantages of getting a personal loan online from a company like Dutton Lending is that it is fast and simple. You can apply for a personal loan from the comfort of your own home and get an instant decision on whether or not you’re approved for the loan in minutes. This means that you won’t have to wait in long lines at the bank or fill out complicated paperwork just to see if you qualify for financing.
Another advantage of using a personal loan is that it can help you consolidate your debt. If you have multiple credit card balances and personal loans, getting a personal loan can help you simplify your finances by combining all of your debts into one easy monthly payment. This will also help you save money in the long run by reducing the amount of interest that you pay on your debts each month.
Whether you are planning a large purchase or trying to fund an unexpected expense, personal loans can provide the financing that you need right when you need it. Sometimes, immediate action is required. It might not be ideal, but it beats paying hefty late fees or missing out entirely.
Overall, people should consider a personal loan for the following reasons. They are all pretty much acceptable after considering the pros and cons.
- Debt Consolidation
- Payday loan alternative
- Home remodeling before a sale
- Moving expenses
- Medical emergencies
The key is to have a plan to repay the loan quickly. Personal loans do come with an interest rate that’s a little on the higher side, but people who are wise with their money won’t get hit with too many extra charges.
If there is no plan in place, only use these loans for emergencies. It’s better to pay the extra costs that go with a high-interest rate than to ignore an extreme situation.
When to Not Use a Personal Loan
A personal loan from a company like Dutton Lending can be a great tool to help you consolidate debt, cover unexpected expenses, or finance a large purchase. But there are some situations where this type of loan may not be the best option. Here are four things you should avoid using a personal loan for:
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Personal loans shouldn’t operate as a bankroll for investing purposes. If you’re looking to invest money, you may be better off opening up a brokerage account or contributing to a 401(k).
Investing is a gamble, even for the savviest minds in the world. It takes a long time to payout. During that time, a person is on the hook for paying the interest rate that goes with the personal loan.
It is best to invest money that’s already available. Leave personal loans to more extreme situations.
Large Personal Expenses
Using a personal loan to finance personal expenses, such as a vacation or home renovation, can be risky. It’s important to consider whether you have the financial means to pay off the loan on time.
Paying for home renovations only makes sense if the goal is to flip the home soon. Otherwise, a home improvement can usually wait.
Anyone applying for a personal loan should thoroughly examine their spending habits. Anything that can be done without should be cut back on at this time. It will help with the repayment process. While tempting to take out a personal loan to have fun with the money, a person could end up falling into some severe financial trouble along the way.
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Fully Funding an Emergency Fund
While personal loans can help you cover unexpected costs, it’s generally better to build up your emergency fund and avoid relying on credit. Instead of taking out a personal loan, try setting aside money each month into an emergency savings account until you have enough saved up to deal with any unexpected expenses that may come your way.
Being diligent about creating an emergency fund is often easier said than done. However, many end up surprised by how little needs contributed to an emergency fund each month to see actual results.
Final Thoughts On Smart Decisions With Personal Loans
Overall, while personal loans like what you can get from Dutton Lending can be a useful tool in certain situations, it’s important to carefully consider whether or not a personal loan is the right option for you. If you’re unsure, it’s always a good idea to speak with a financial advisor to get expert advice.
Dutton Lending knows that many people are applying for a personal loan through the website for the first time in their life. They have a lot of questions about what to expect, and it can all seem overwhelming. They have a team ready to help out at all times, and it’s as simple as reaching out to them.