You need to think twice before you take any personal loans. Here are five moments when taking personal loans might be the best solution for you.

Sourced from: www.smbceo.com

It may seem obvious, but if you don’t need to take out a loan – then don’t.  It’s clear that lending is a big business, with many, many loan companies making giant profits – off of you!  That said, there are occasions when taking out a loan, specifically a personal loan, can be a huge advantage to you.  Taking out a personal loan, which is not secured to any property or assets, means there’s no danger of a lender trying to claim your home or car.  Of course, interest rates can be higher because of this.  For that reason, it’s very important to carefully consider if the situation truly warrants borrowing money.

The following five occasions may qualify as good times to borrow money.  Of course, everyone’s financial situation is different.

Consolidating your debt.  One of the best reasons to take out a personal loan can be to consolidate other debt.  If you already have multiple loans (credit cards, auto loan, etc.), it can be a good option to consolidate loans into one lower interest rate and monthly payment.

As an alternative to predatory lenders.  If you are considering taking out a payday loan, think twice.  Many of those services target people with bad credit scores and few options, and interest rates can go up to 800%!  Instead of working with this type of lender to get an advance on your paycheck, consider taking out a personal loan where you have much more flexibility and greater options.

In case of an emergency.  As we know, life can be unpredictable.  Disasters can happen, and when they do, they are very typically expensive.  Unplanned medical expenses can be a great reason to take out a personal loan.  Medical expenses can be very high, and when they aren’t already factored into your budget (in the case of an emergency medical situation), they can be extremely scary.  A personal loan takes the pressure off of you to scrounge together potentially thousands of dollars in a very short timeframe.

Making a large, necessary purchase.  Of course, your definition of necessary may differ from someone else’s, but if you are looking for flexible money to help you purchase your dream car or a new computer, a personal loan may do the trick.  Other instances may include needing money to replace a broken kitchen appliance (such as a refrigerator or oven).  Personal loans can offer low-interest rate options to help you purchase these high value items.

Much needed vacations.  Another reason to take out a personal loan may be to fund a once in a lifetime vacation.  Maybe a relative is having a destination wedding, or a group of friends are making plans to take an international trip to your dream country.  Taking out a small personal loan with a low interest rate can be one way to help you still enjoy life without being burdened by financial constraints.  Just be careful not to borrow more than you can comfortably pay back.