Loans are normally intended for the purchase of a specific asset: the house is purchased thanks to a loan called a mortgage, the car with a car loan. With a personal loan, you can buy anything; sure, for some lenders it is necessary to specify what you will do with the money they lend you. In general, with the money borrowed, as long as the reason is legal, you can do whatever you want. The difference between the personal loan and the finalized loan is the guarantee. With the mortgage, the house itself is the guarantee. Just like the car you buy is the auto loan guarantee. The collateral on the personal loan, since it does not exist, means that the interest rate will probably be higher. If desired, there are also secured personal loans if you wish to cut costs. In other words, personal loan would not seem convenient. Instead here are five cases, where personal loan could prove to be a good option for you.
Credit Card Consolidation
If you have some credit cards charged at the maximum, you may consider to get a personal loan in order to consolidate all your expenses into a monthly payment. This option seems to be more appealing if you consider that the interest rate on the loan could be considerably lower than the annual percentage rates (APRs) on your credit cards. So, the risk here is feeling less stressed about your newly available credit limits that you load more on to your cards before the loan is repaid.
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