Top 12 Reasons More People Are Using Personal Loans

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Personal loans are growing in popularity. The Experian credit bureau estimates that the number of openings in 2017 was 11% higher than the previous year.

And it’s not hard to see why people love them. They are affordable, predictable, and widely available. And they’re cheap (often free), quick, and easy to install. Better yet, you can use the money for any purpose.

Often times, they make more sense than getting a cash refinance, home equity loan, or opening new credit cards.

Are personal loans the future foundation of personal finance? They just might be.

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Survey reveals common use cases for personal loans

But which endings are the most popular? In other words, why do people take out personal loans? A 2017 survey by Discover said:

  • 68% of personal loan holders said it helped them reach their financial goals.
  • 70% of those surveyed said that taking out a personal loan made them financially responsible.
  • 22% chose a personal loan for lower interest rates compared to other borrowing options
  • 21 percent said the funds were quickly recovering.
  • Other benefits included no collateral required, fixed interest rates, and fixed monthly payments.

The benefits of personal loans add up.

Personal loans: the top 7 reasons people use them

This Discover survey was followed in 2018 by a Twitter poll conducted by USA Today. They had different results but a lot of common themes.

Here are the main reasons people give for taking out personal loans.

1. Significant medical costs

It topped the Discover survey, but came fourth in the USA Today Twitter poll. But you can see how attractive personal loans would be for those facing sudden medical need.

With more and more hospitals and clinicians requiring “point-of-care collections” (upfront payment for those who are underinsured or uninsured), many have no choice but to borrow to finance the disease. treatment.

Meanwhile, the financing offered in doctors’ offices and hospitals often comes with “gotcha” clauses (beware of “deferred interest”) that can trap the unwary. Personal loans are therefore often the smarter choice.

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2. Debt consolidation

It was the first in the Twitter poll and the second in the Discover survey. So all in all, this may be the # 1 reason people turn to personal loans.

Experian says you may be able to pay off your student loan debt faster and save money in the long run with a personal loan. But you’ll have to explore this carefully before you press the button.

Plastic problems are more common. It’s so easy to build up unmanageable debt on credit cards and credit cards that many people find themselves juggling multiple accounts and running out of money at the end of each month. Personal loans can help because they usually offer a one-time, more affordable payment.

But that only works if you stop increasing your card balances. Keep increasing your balances and your situation will likely be worse.

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3. Home renovation

It was third in the survey but nowhere in the Discover survey. Borrowing to renovate your home can be a good investment, depending on the project you are undertaking.

But are personal loans your best bet? A lot of it depends on how much you are spending. If it’s a few hundred dollars, you might prefer to pay in cash or in plastic. If it’s tens of thousands, you should check if you’d better use a home equity product or refinancing of collection. But for medium sized projects, these personal loans usually look good.

Check my eligibility for a personal loan to pay for home renovations (Jul 28, 2021)

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4. Finance a start-up or an existing small business

This ranked third in the Discover survey. And you can see why. Maintaining cash flow is a challenge in most start-ups and many established businesses. But getting business financing when you need it is often not possible.

Of course, personal loans are just that: personal. So you will be on the hook for the loan. But it can be worth it to keep your business afloat.

Check my eligibility for a personal loan to pay for business expenses (Jul 28, 2021)

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5. Unexpected event

It’s pretty vague. But we all know what an unexpected event looks like: the car needs to be fixed; you must go to the emergency room; the HVAC breaks down during a heat wave …

These are things you would like to pay from your emergency fund. But a 2019 survey shows that only 40% of Americans saved $ 1,000 for such events. And personal loans often allow you to have the cash you need within 24 hours.

There are many sources online from which to start the application immediately. Start with the link below.

6. Marriage

The survey found that only 3% of those surveyed said they had taken out personal loans to finance a marriage. Which is surprising, given that The Knot estimates that the average wedding cost $ 33,931 in 2018. Do only the rich get married these days?

If you are not wealthy and you or an adult child is in the process of getting married, you may want to check out personal loans.

Check my eligibility for a personal loan to pay the wedding expenses (Jul 28, 2021)

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7. Vacation

When it comes to reasons for getting personal loans, more than twice as many survey respondents (7%) identified vacations as weddings. Weird, eh?

Except, according to a 2018 survey, the average cost of domestic vacations was $ 1,145 per person – or $ 4,580 for a family of four. Go for first class travel and fancy hotels and you could easily get into five digits or more. And that’s before you even think about foreign destinations. So maybe it’s not that weird.

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Five more reasons people use personal loans

These seven exhaust the survey and poll information on why people get personal loans. But, for the record, there are many, many more. Here are five:

8. Funeral expenses – When you’ve tragically lost a loved one, you want a quick and easy way to pay for funeral expenses.

9. Major life event – Birth, graduation or important anniversary or anniversary. It’s time to party! And maybe buy some expensive gifts.

ten. Buying a hard-to-finance or valuable car – You may have trouble getting a loan for a car, boat or RV on a classic or older vehicle or boat. Personal loans do not come with such restrictions

11. Veterinary bills – You won’t have this if you don’t like animals. But this writer would have robbed a bank before seeing one of his animals suffer. A personal loan would keep him out of jail

12. Tax debt – You really don’t want the IRS to blow you up the neck. Maybe you can borrow to get directly with your sympathetic collector

If you are facing one of these dozens of issues (or another) and need to borrow, you should definitely get quotes for personal loans.

View Personal Loan Rates Now

Personal loans are a fantastic way to finance specialized needs quickly.

Below you’ll find a link that takes you to some of today’s top rated personal loan providers.

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