Should you accept a pre-approved personal loan?

So you receive information that you are pre-approved for a personal loan. There are many questions to answer before you decide to accept the loan. Normally you will have a decent credit score for a financial institution to offer you a loan, or your credit score has just recently been upgraded. Everybody needs extra cash in their lives, but should you take the loan? Let’s ask a few questions to see if taking the loan is right for you.

Why are they offering you a pre-approved loan?

Generally speaking, you have probably recently paid off the balance of one or more credit cards and financial institutions are assuming that you have freed up your monthly budget and you can afford to take on more debt. This situation is probably true; however you may not want to immediately put yourself back in that situation. The financial institutions want you to use the money that they are offering you and are hoping that you find it beneficial to accept their loan. They have looked at your credit history and feel secure in offering you a loan.

Do you need extra cash for some expenses?

If you are in need of some extra money for a new car or some household repairs, then it may be wise to accept the loan. Just be wary not to jump on the loan for some luxuries that you would like to purchase. Many times the interest rates are higher than if you were to go to your bank and apply for a loan. In these troubled economic times it may be best not to add more debt to your financial portfolio. If you really need the cash then you probably should accept the loan, but make sure that you understand all of the terms offered and know that you can afford to add the extra monthly debt to your expenses.

How much money are they offering you?

Normally pre-approved personal loans that are not tied to a house purchase will not be an extremely substantial amount of money. Make sure you check the interest rate that is tied to the loan and if you actually require extra money, see if you can only accept a portion of the loan offered. You may be better off using your credit cards to help out with the necessities of life.

Just remember to ask yourself if you truly need the loan offered. It can be very tempting to accept a pre-approved loan, but it can be a burden.

Ways to Use a Personal Loan to Help with Moving Expenses

Ok, you have to move. This is going to be a very stressful time in your life. Taking a personal loan to help out on this situation will help you out in many ways. If you are not being moved by the company that you work for, than the cost is totally on you.

There are many different reasons that people make a major move, family, business opportunities, or even the fact that you need to get to a new place. Keep in mind that a major move costs a lot of money and you want to have the ability to pay back any loans that you incur before you make that move.

Taking a personal loan to just move “somewhere else” is not a good idea. You need to know what you are doing before you decide to borrow that money; your credit is on the line and you have to have the means to pay off your debt. A personal loan can help in a lot of ways when it comes to the actual moving process.

The cost of a moving company or truck rental (don’t forget fuel) can range in the thousands of dollars. Add on the cost of a deposit on a new rental place can put you out of the possibility of moving. Taking a personal loan that can cover these costs will definitely be a benefit as long as you have the means for making the payments.

Moving is never fun, I have never met someone that “likes” to move. Having that extra cash on hand can make a big difference. You can hire local help to assist you with the actual move in to your new place. The personal loan can give you peace of mind as you are entering a new location, it would be cheaper than using your credit cards, and the rate should be lower.

By having the cash on hand, you can feel more comfortable in your “new town”. I highly recommend that you use a personal loan for a major move, just make sure that you have the means to pay it off once you get there.

The benefit of having the cash on hand in a new environment is priceless. Be smart when you take out a personal loan, you need to use the money wisely and efficiently. Just trust in your instincts and know that cash in your pocket is a good thing when moving.

What to Consider when Chosing a Personal Loan

There are many reasons people take out personal loans. A personal loan can be very helpful for many different reasons, but be sure that you take this financial obligation very seriously. Here are some tips when it comes to deciding on a personal loan.

Interest Rate:
This is the most important factor when it comes to considering taking out a personal loan. The interest rate that you end up agreeing upon can cost a lot of money when you consider the life of the loan. Most personal loans are usual taken out on s short term basis (under five years) and time factor of the interest is not as important as say a home mortgage, but the interest can add up to costing you a lot of money. You always want to make sure that you get the best interest rate possible and you want to do some research to find that interest rate. Just as an example, if you borrow $1000.00 at 10% you will be paying pack the lender $1100.00, that may not seem like a big deal, but that is an extra month’s payment on that loan. When you multiply that loan to a higher amount borrowed you can see how obtaining the lowest possible interest rate can really be important.

Who you Borrow from:
In general you bank is the best bet when it comes to taking out a personal loan. The interest rates tend to be lower and you have already established a business relationship with this institution. By borrowing from your bank, you tighten that relationship and establish credit with them that you can benefit from in the future. Credit unions are also a very good place to obtain personal loans and it is usually fairly easy to obtain credit from these establishments. You do want to avoid the “Quick Cash Now” establishments. These businesses often charge considerably higher interest rates. They can be the solution as they are more lenient when it comes to your past credit history.

Length of the Loan:
As a rule; you want to try and pay of the personal loan as quickly as possible. The drawback to doing this is higher monthly payments. You want to figure out what you can afford to pay and how quickly you can pay back the loan without jeopardizing a healthy monthly cash flow. If necessary, chose a loan that lasts a little longer to make sure you have the money to pay your other monthly living expenses. Most personal loans will have a penalty clause attached to them in the event that you pay it off early. The lender needs to make money on the loan and will charge you fees to make sure it was worth their while to lend you the money.

The 7 most popular uses for a personal loan

I am going to give you a few popular uses for a personal loan. Please be advised that this is not necessarily for everyone.

  1.   The Home Improvement Loan
    We can all use a little bit of work on our dwellings; this is a very popular reason that people take out personal loans. Be advised that you should check with a professional before any work is done with regards of a personal loan. You are more likely to get your money back from taking an equity loan against your property than actually using your personal credit for this action. Your house has its own identity with value, use your home for its own good and upgrading.
  2. The Auto Loan
    You will more than likely lose money on this loan due to the depreciation of the vehicle, however, you end up with a true asset in regards that you have a vehicle. By securing funds through a personal loan before you begin shopping for a vehicle gives you leverage in negotiating the price of the vehicle. Having cash on hand is always a way to get a lower price for the vehicle and you do not have to deal with the hassles of financing your purchase.
  3. The Student Loan
    This is a popular use for personal loans; however you are probably better of taking out a student loan to further the education of yourself or your children. The terms of paying back the student loan are much easier as you usually do not begin to pay back the loan until you are finished getting the education. Interest rates are usually lower on a student loan than a personal loan.
  4. The Debt Payoff Loan
    This can be a very beneficial use of a personal loan. If you are finding yourself with a lot of credit card debt at high interest rates and fees, then obtaining a lower rate personal loan to pay off the credit cards is very cost effective and a financially sound decision. One very important aspect is to not use your credit cards after you have paid them off with the personal loan. You will end up deeper in debt and find it hard to overcome the debt. Wait until you have paid off the personal loan before you start using the credit cards again.
  5. The Loan to Another Family Member
    Taking out a personal loan to give to another family member is usually not a good idea. The person you are loaning the money to probably has poor credit or has a lot of debt, hence they are asking to use your credit to help them out. If you do decide to help out a family member by taking out a personal loan, make sure that you have the ability to pay off this loan in case the family member misses payments or ends up defaulting. You do not want to ruin your credit by missing payments.
  6. The Medical Loan
    Obviously no one wants to use a loan for medical reasons, but sometimes it is just plain necessary to obtain medical care. If you find yourself in this situation, just make sure you do not over extend yourself financially; sometimes you just don’t have a choice.
  7. The Vacation Loan
    This is a very popular use for personal loans and is quite worth the incurred debt. People need vacations and by using your credit to obtain a personal loan you end up with a much better vacation. Make sure that you have the means to repay this loan and do not just borrow and spend the money unwisely.