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What can you use a personal loan for?
Not sure how you can use your loan funds? Here are your top options.
When you need to borrow money, there are plenty of choices to choose from. If you’ve started looking at personal loans, you may be wondering what sort of situations you can use one for and what you can do to find the best lender for your situation. By breaking down your options, you can make your decision easier and know that your loan will be useful for whatever purpose you need to pay for.
How can I use a personal loan?
Lenders rarely place restrictions on how you can use the funds from your personal loan. This is by no means an exhaustive list, but it can get you started when you have large expenses you need covered.
|Purpose||Can you use a personal loan?||What to consider|
Many people take out personal loans for debt consolidation. It’s a top option because you can potentially lower your monthly payments or score a lower interest rate. However, it’s not guaranteed to be a better deal. You’ll still have to compare your options to find the best debt consolidation loan.
While your doctor or hospital might offer its own financing, you might be able to find a better deal by comparing your medical loan options or by looking for a general-use personal loan.
Buying a car
Pay off taxes
Take out a loan to pay your tax bill in one lump sum to avoid fees charged by the IRS for installment plans or late payments.
Lenders have different criteria for approving loans for business purposes, but you may still be able to get a personal loan for business use.
There are lenders that offer personal loans for vacations. However, it’s best to know your budget and only borrow as much as you need before jetsetting around the globe.
You can certainly use a personal loan to finance your wedding. But like with vacations, it should be in combination with your savings to keep interest costs low.
A personal loan can help you pay for unexpected pet ownership costs, such as large veterinary bills or even the deductible on your pet insurance.
Boat or jet ski
Many lenders are willing to help you foot the cost of becoming energy efficient by offering loans to buy solar panels and other equipment.
Compare top personal loan options
Will my loan purpose affect my application?
It may. Specific loan purposes may be seen as more risky than others. For example, if you’re applying for debt consolidation, you may already appear to be higher risk than someone who’s buying an asset like a car.
However, being approved for a loan will depend more on how the lender assesses your risk than what you plan on using your loan for. Ultimately, your eligibility will come down to whether you meet the lender’s eligibility criteria and if you can afford the amount you’re looking to borrow.
How top lenders let borrowers use their personal loan
|Provider||Auto financing &amp; refinancing||Business expansion||Debt consolidation||Home improvement||Special occasions & wedding||Vacation|
What other credit options do I have?
While a personal loan can be used several ways, you also have other financing options to consider.
- Home equity loans. If you’re undertaking home renovations, using the equity from your home may be an option. Since you’re using your home’s equity as collateral, you may be eligible for a lower interest rate.
- Business loans. If you need a large loan for business purposes, compare business lenders offering financing up to $5 million.
- Credit cards. These can be a good source of ongoing credit and can come with high limits – between $1,000 and $100,000 – that you can use when you don’t have the savings to make a purchase. However, many tend to have higher interest rates than personal loans.
- Balance transfer credit card. If you have debt across a few credit cards or even a few personal loans, you may want to consider a balance transfer credit card. These let you pay 0% interest on the debt for an extended period of time.
What would you like to finance?
Because lenders don’t place many restrictions on the way borrowers can use a personal loan, you can use your funds for almost anything. However, not everything should be financed.
You may be better off saving for that big purchase or vacation that taking out a loan. If possible, speak with a personal accountant to help guide your decision.
When you’re ready to borrow, compare your personal loan options to find the best deal for your budget.
Frequently asked questions
How can I get approved for a loan?
After you’ve decided on a lender, apply from finder.com by selecting the Go to Site button on the comparison table.
Follow the instructions on the lender’s website and be sure to review the eligibility criteria to make sure you qualify. There’s no guarantee that you’ll be approved, but you can follow these tips to improve your chances of being approved for a personal loan.
Why was my personal loan application rejected?
Many lenders will give you a reason for your rejection or allow you to request this information. Otherwise, it can be difficult to determine why your application was rejected. Review the eligibility criteria closely before submitting further personal loan applications.
How can I borrow money if I have bad credit?
When you have bad credit, your options for personal loans may be limited. And while there are personal loans for bad credit, you may not be able to borrow as much as you need to fund your specific purpose.
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