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While the prospect of a personal loan can be intimidating, trepidation didn’t stop Donald Trump, the founders of Starbucks or flamboyant Virgin Airlines owner Richard Branson when they needed funds. A short-term loan goes a long way in providing a better quality of life and setting up a flush future.
In our blog post, “When the Personal Loan Works Better than the Credit Card,” we explain that the personal loan can:
• raise a credit score
• save a borrower half in monthly interest charges when compared to credit card rates
• help borrowers plan (because the monthly payment is fixed.)
The personal loan can actually brighten your financial picture. Considered an installment loan rather than revolving credit, when you use it to consolidate credit card debt, banks see it as your dedication to paying it off rather than defaulting or going into bankruptcy in order to escape it. Experian and TransUnion often raise your credit score within a month or so. See? The personal loan isn’t so bad!
While you will be in debt with a personal loan, the regular payments (often sent automatically from your account through bill pay), help you budget better for the month. Knowing a set amount will come out of your bank account keeps your urge to splurge under control.
Now that you know the personal loan is a common way people pay for purchases and/or emergency expenses, read the following most common scenarios where people use personal loans.
1. You are paying credit card debt at the average rate of 15% or more (23%? 29%) when you can most likely get an unsecured personal loan for 7 to 10%.
2. Collections agencies are calling you about medical bills. NerdWallet Health’s survey found that 56 million Americans have trouble paying their medical bills. More frightening, 35 million American adults get collections agencies calls for them bills and they cause 17 million Americans to receive a lower credit rating.
3. Moving expenses become overwhelming. U.S. News found the average cost of a move within a state is $1,170, and between states, $5,630. These expenses are most often necessary for family members to earn a living. When a company doesn’t foot the bill, they land on individuals. Putting these expenses on credit cards just sets you up for high interest expenses. The personal loan only calculates interest on the principal amount, not the principal plus the interest the way credit cares do.
4. Your car or computer isn’t running. Unless you live in a city like New York or San Francisco that has reliable public transportation, you’re going to need a car. Even GoCars and ZipCars prices add up, particularly if used regularly. Most important, however, a car adds to your quality of life.
5. Your home equity isn’t sufficient for critical home repair expenses. Failing to qualify for a second mortgage doesn’t mean you have to go without a working water heater, air conditioner or mold remediation. All of these things are critical for your family’s health and well-being. Home prices have remained steady for several years now and chances are your home value will go up if you stay in it long enough.
It’s in these five circumstances that most Americans seek out personal loans.
First Financial has the most competitive rates for high-credit-score borrowers. We even welcome those with fair, poor and bad credit because they make up 56% of the current American population. Use your laptop or tablet to make payments, review statements, and update account information. You can even check your rate without impacting your credit score!
Apply now for a personal loan with First Financial, A+ rated by the Better Business Bureau!
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