By Jeff Rose
This is a post written by me on behalf of Discover Personal Loans. All opinions are my own.
As a Certified Financial Planner (CFP), I’ve spoken to people who are ready to take better control of their debt, and their financial situation in general, but aren’t sure where to start.
There are times when taking out a personal loan can be an advantageous first step – even if the idea of borrowing makes you uneasy.
Maybe you have multiple debts to consolidate or need capital to complete an important project. Whatever your reason, the influx of cash that personal loans offer can be used to achieve a number of goals.
4 Steps to Using Personal Loans to Your Advantage
If you’re smart about debt and intent on using credit to your advantage, you may even be able to leverage personal loans to grow wealthier and become more financially stable.
The key to making this work is identifying your needs and strategically choosing a loan product that works with your goals and your budget.
Want to learn more about the power of personal loans? Here’s how you can use this type of loan to your advantage:
1. Use personal loans to help you achieve short-term goals.
The flexibility of personal loans makes them a good option for people who have specific, short-term goals to achieve – paying off bills, for example, by consolidating those higher-interest debts.
Or maybe you want to help your child pay for their wedding and need a personal loan to make their her dreams come true.
The best part about personal loans is the fact that you could, if approved, borrow what you need (within the available loan ranges) and tailor your new loan to your goals with the least impact to your financial health.
2. Leverage borrowed money to achieve long-term goals.
Personal loans can come in especially handy when you have an important, long-term goal in mind and you need cash to see your vision through.
Perhaps you have an idea to make your home more eco-friendly and improve your family’s qualify of life. In that case, a personal loan may be ideal.
Maybe you have an epic business idea but need cash to bring your idea to life. Once again, a personal loan may be exactly what you need, if you’re not able to get a business loan.
Why? Because with a personal loan you can qualify for a fixed interest rate and set monthly payment. Sometimes you can even get the funds in as little as a week.
3. Consolidate higher interest debts.
If you have higher interest debts, a personal loan can serve as a lifeline.
By consolidating higher interest debts into a personal loan with a fixed rate and better terms, you can save money and buy time to get your financial life in order. Some lenders offers debt consolidation loans up to $35,000 for this exact purpose.
If you have several credit cards with high APRs and outstanding balances, a personal loan may be a way to get on a better track.
With a manageable payment each month, you could be on your way to financial independence that much faster.
4. Build positive money habits that last a lifetime.
The inherent lessons personal loans teach can also be a boon to your overall financial health. Taking out a personal loan can open your eyes to the realities of debt – the fact that you must repay what you borrow, and how to make monthly payments on time.
The positive money habits you can learn through personal loans can help build a foundation of solid money management that can last a lifetime.
The Bottom Line
If you need cash to reach a specific goal, a personal loan can help. There are times in life when borrowing can actually leave you better off in the long run.
If you’re curious about personal loans and wondering what you could qualify for and afford, your best bet is playing around with a personal loan calculator. By sharing how much you want to borrow, your ideal repayment term, and other details, you may connect with a personal loan and monthly payment that fits your budget and your lifestyle.