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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.
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|
|Debt consolidation||Yes||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.|
|Medical bills||Yes||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.|
|Home improvement||Yes||Not only can you use a personal loan for home improvement, you can also consider using your home’s equity to pay for renovations.|
|Buying a car||Yes||Although you can use a personal loan to cover the cost of a vehicle — especially if it’s a vintage model — you may be able to score a lower rate by opting for a car loan that uses your vehicle as collateral.|
|Pay off taxes||Yes||You can 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.|
|Business||It depends||Lenders have different criteria for approving loans for business purposes, but you may still be able to get a personal loan for business use.|
|Vacation||Yes||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.|
|Wedding||Yes||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 the cost of interest low.|
|Pet care||Yes||A personal loan can help you pay for unexpected costs that come with being a pet owner, such as large veterinary bills or even the deductible on your pet insurance.|
|Boat or jet ski||Yes||While you can use a personal loan to finance a boat or jet ski, you may not be able to cover the full cost. If you can’t borrow the maximum amount with an unsecured loan, consider borrowing a secured loan for your boat or jet ski.|
|Going green||Yes||Many lenders are willing to help you foot the cost of becoming energy efficient by offering loans you can use to buy solar panels and other equipment.|
It may. Certain 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.
|Provider||Auto financing & refinancing||Business expansion||Debt consolidation||Home improvement||Special occasions & wedding||Vacation|
While a personal loan can be used a number of ways, you also have other financing options to consider.
Because lenders don’t place many restrictions on the way borrowers can use a personal loan, you can use your funds for just about 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.
After you’ve decided on a lender, you can apply from finder.com by clicking the Go to Site button on the comparison table above.
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.