4 scenarios where a personal loan is a good idea and 3 where it’s not.

Joe Schwartz

Joe Schwartz

Personal Loans Editor |

An online personal loan, if used properly, can help you in a wide variety of financial situations.

We’ll look at 4 good ways of using an online personal loan and 3 purposes you should never use it for. 

The Good

Paying for Medical Expenses
Medical disasters are often unpredictable and not always covered by insurance providers. In these unfortunate circumstances, a personal loan can help greatly, providing you with the financial means necessary to heal and avoid massive hospital debts. Plus, the faster you return to being healthy, the faster you can return to financial stability.

Purchasing/Renovating a House 
Purchasing a home comes with a wider variety of costs, some expected and some not. You will undoubtedly look for a suitable mortgage to cover the majority of the home cost, but if you fall short on your down payment or require extra funding to cover fees, a personal loan makes sense to help secure your home for the future. Furthermore, if you are renovating a home in order to sell, a personal loan can be a great way to increase your home’s value. This worthy investment will likely pay for itself once you are able to find a buyer.

Consolidating Debt
If you find yourself already in debt, a personal loan can actually be extremely helpful in paying off some of your remaining balances and then consolidating the rest of your debt with a manageable monthly fee. This way, you’ll know exactly how much you owe each month and you can pay down your debt in a simple and organized fashion.

Paying for Your Tuition 
The rising cost of college tuitions have left many students desperate and concerned for their financial and educational future. Not all students are eligible for a student loan, and in these cases, a personal loan can greatly help offset the cost of tuition.

The Bad

Going on Vacation
While this may sound appealing in the short-term, using a personal loan to take a vacation can be a devastating financial decision. Unlike the 4 reasons mentioned above, this has no long-term benefit and you will end up spending years for a vacation that lasted only a few weeks.

Shopping
A shopping spree paid for with a personal loan is simply a not a good idea and like a vacation it’s benefit is extremely short-lived. Once you find yourself in debt from the personal loan, credit card debt is likely to follow.

Weddings
Do you really want to start your marriage off with debt and loan payments? There are many ways to throw a beautiful and unforgettable wedding on a budget and it simply does not make sense financial sense to spend years in debt for one day.

An online personal loan is an incredible tool that can address crucial personal needs, but using it for purposes that are anything but important can make you end up in a world of hurt. Do yourself a favor and don’t jeopardize your good sleep by spending money on things you don’t need.

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