When a Personal Loan Might be Your Best Option
Many people are familiar with loans for cars or homes, but not every loan is secured against a large purchase. In fact, some personal loans require no collateral at all and can be a useful financial tool, especially if you want to finance a larger expense while avoiding dipping into your emergency savings.
Using a Personal Loan for a Wedding
While paying for a wedding with existing savings earmarked for the purpose is ideal—the world doesn’t always work that way. If there are costs to cover, a personal loan may make financial sense even for a smaller wedding.
The average wedding costs just over $30,000, which makes it too much for a single credit card, and the interest you’d pay would make it incredibly more expensive. Some wedding vendors offer financing, but you may find that a single personal loan nets you a better repayment plan or interest rate.
Using a personal loan, you may even be able to bring prices down by offering to pay more upfront. Caterers, tailors, and other small business owners are likely to appreciate the simplification of their cash flow. If they can pay their employees and purchase supplies without going into debt themselves, they may be willing to pass those savings on to you as well.
Personal Loans for Adoption
Adopting a child can be one of the most rewarding experiences of your life, but it can also be costly. Several screenings and fees stand between you and a successful adoption. Realistically, costs could be as high as $50,000 to adopt a child in the U.S. today—even more, if you are adopting an infant from overseas.
Obtaining financing for this process can be very difficult. Since funding an adoption is not secured by an asset like a car or a home.
Fortunately, a personal loan can help you make things happen. With shorter term-length options and fixed rates, you can make a plan to budget both for your adoption and your new child.
Covering Medical Expenses with Personal Loans
Whether you’re considering an elective surgery, thinking about the cost of fertility treatments, or expecting other medical expenses—personal loans can be a financial tool for covering medical treatments.
Personal loans can be beneficial for covering treatments where the costs are known (at least in estimate) in advance. Because personal loans often have a fixed rate with various options for term lengths, you can choose the right option for your needs and make a clear plan to pay it off over time.
Even unexpected medical expenses could be a good candidate for a personal loan. If you have exhausted your other options like negotiating your bill, using a personal loan to cover remaining costs could keep you from going into collections and affecting your credit score.
If you own a home with some equity, a HELOC could also be a good choice, especially if you cannot predict the costs of potential treatments. Since a HELOC is a line of credit rather than a lump sum, you’ll have more flexibility to take out only what you need when you need it.
Extra Education Expenses
Depending on your personal financial situation, your student loans may be insufficient to cover the full cost of your education. Sure, you can get loans to cover tuition, but books, supplies, computers, and other costs add up quickly. If you’re going back to school later in life, many traditional funding opportunities may not be open to you.
In these instances, taking out a personal loan to cover the extra costs of your education can be a lifesaver. Instead of paying for those costs out of pocket or with a credit card, you can pay for them upfront with a loan you can budget for going forward.
This article is for educational purposes only. WeStreet Credit Union makes no representations as to the accuracy, completeness, or specific suitability of any information presented. Information provided should not be relied on or interpreted as legal, tax or financial advice. Nor does the information directly relate to our products and/or services terms and conditions.