Even when you’ve tried your best to manage your money well and save for large expenses ahead of time, there may be times when you need more than what you have stashed away. This is especially true if you need to get a large project off the ground or a way to pay off outstanding debts.
In this case, personal loans can be your greatest ally.
Here are three examples of great ways to use personal loans, with real-life examples of people who’ve done so successfully.
1. Use a Personal Loan To Pay Off Credit Card Debt
One of the most common personal loan uses is to repay and consolidate debt.
Let’s say you have balances across multiple credit cards with varying interest rates and different due dates. By using a personal loan to pay off debt, you essentially consolidate them into one loan.
This is exactly what Emilie Lima Burke, 23, of BurkeDoes.com—a blog about overcoming debt while balancing a healthy lifestyle—decided to do in an effort to pay off her credit card debt.
Taking out a personal loan not only helped Burke pay off her debt, but also made it possible for her to save money on interest. Each of Burke’s credit cards had interest rates ranging from 16 percent to 22 percent. By consolidating her credit cards with a personal loan, she was able to significantly reduce her interest payments to 8 percent.
“The personal loan helped me feel less overwhelmed,” she says.
“It reined in my discouraging interest rates and gave me just one payment to make rather than several.”
2. Use a Personal Loan For Your Wedding
Weddings are not cheap, yet they’re one of life’s big moments—not a time when you want to skimp. Using a personal loan or a line of credit to cover your wedding costs can be a good strategy. If you have a good idea of your wedding’s total cost, then a personal loan may be a good fit. But if you’re unsure of the budget, you may need to use a line of credit.
Bailey Cummins, a 20-something blogger, has publicly written about her decision to use a personal loan for her wedding. Due to her husband’s potential deployment, they found themselves pressed for time. Without the opportunity to save up for their wedding, they opted to use a personal loan to get their nuptials underway before he received his new orders.
3. Use a Personal Loan for Renovations
One of the smarter and more common reasons people take out personal loans is to use them toward property renovation costs. William Reid, 31, of Roads of Gold decided to use a personal loan for rental property renovations when one of his properties needed $17,000 worth of work.
“I decided to go with a personal loan due to the ease of getting the credit and the low interest rate,” he explains. Because the funds were deposited directly into his bank account, he was able to quickly work with contractors to get the renovations done.
Reid’s decision ended up being a good one. By renovating his rental properties he was able to charge more for rent. “Right now, my units are cash flowing even with the mortgage and the personal loan payments, so it ended up being profitable for me,” he adds.
Whether it’s to consolidate outstanding debts or to pay for life’s big moments or large projects, personal loans are a strong option to help cover the cost and move forward.