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Is Getting A Personal Loan Right For Your Situation?

Personal Loans

When you hear of personal loans, the idea might make you laugh. Isn’t that what credit cards are for? In reality, credit cards have kind of worked themselves out of the market because they have such sky high interest rates. And then if you miss a payment, the rates can go even higher and you have a lot of fees that you have to pay in order to get back on track with the company. Instead of dealing with the hassle of credit cards to finance purchases, many people are once again turning to personal loans. Personal loans used to be very popular in the 1970s and 1980s, along with store layaway, but then credit cards came in to popularity and took over for a time.

Options With Loans

Since a lot of people got in to trouble with credit cards and are starting to do away with them, the personal loans business is again seeing an increase. When people want to make a large purchase, such as a set of furniture, a lawn mower, take an exotic vacation or even purchase a new roof, it makes more sense to get a loan from the bank with a much smaller interest rate. When the bank will only charge you 16%, but a credit card company will charge you 20% or more, then you can see why it saves you money to go the route of the loan. And both options would let you pay it off sooner, but if you can’t then you are penalized with interest each month that you don’t.

Loans also give you the option for repayment terms. A credit card needs to be paid each and every month, or else your interest rates might go up. A loan rate will never go up. It is locked in for the life of your loan. And with a loan, the amount you have borrowed will not change, therefore the monthly payment will not change. With a credit card, you or your spouse might go out and charge something else. The you have that price added on, as well as the interest for that item now too. The monthly payment will vary according to all of the purchases you have on the card.

Reasons for Personal Loans

There are reasons that you might need a personal loan that don’t justify a credit card purchase or waiting. For instance, say if you live out in the country and have a propane tank as your source of heating in the winter time. The utility company comes along and says they can hook you up to natural gas, but in order to do so you will need to pay $3,000 within two months in order to be on their gas line. You know natural gas is a lot cheaper and the investment to switch will pay for itself in a matter of just a year or so. But what if you don’t have that $3,000 in cash to pay? A personal loan is one way to make the payment without a high interest charge.

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