Many people turn to personal loans when they need to borrow money to make a large purchase or pay for an emergency expense. But why do people take out personal loans in the first place? In this blog post, we’ll explore 13 reasons why people take out a personal loan, from consolidating debt to home improvements.
Read on to learn more about personal loan options and when they might be the right choice.
What is a Personal Loan?
A personal loan is an unsecured loan that can be used for any purpose. Unlike other types of loans, a personal loan doesn’t require you to provide any collateral or security as long as you have a good credit score and can make the monthly payments on time.
How do Personal Loans work?
A personal loan is an installment loan that you can use for various purposes. You will typically agree to the loan amount with the lender up front, along with a fixed interest rate and clear loan terms. After that, you will get your funds and make monthly loan payments until the loan is fully repaid.
Where You Can Get a Personal Loan
There are several companies and financial institutions that offer personal loans. These include:
Banks
Your local bank or credit union is a great place to start when looking for a personal loan. Banks and credit unions may offer competitive rates and have flexible repayment terms, making them an attractive option. They also help you with a secured loan if you have collateral you can leverage.
Online Lenders
Many online lenders offer personal loans with competitive interest rates and convenient application processes when borrowing money. SkyCap falls into this category as we specialize in personal loans for Canadians with poor credit. Typically, this would be an unsecured personal loan for a smaller amount than you would see with big banks.
However, you will want to avoid online payday loans. A payday loan will only cause problems in the future, possibly leading to an uncontrolled debt spiral.
Credit Unions
Your local credit union may also be great for finding a personal loan. Credit unions typically offer lower interest rates and have more flexible repayment terms than traditional banks, making them an attractive option for borrowers with less-than-perfect credit.
13 Reasons Why People Take Out a Personal Loan
The possibilities are endless with personal loans. While it’s totally up to you in terms of using the funds, here are 13 of the most common uses:
Debt Consolidation
If you’re struggling with high-interest credit card debt or multiple loans, a personal loan can help. By consolidating your debts into one monthly payment, you can quickly manage and pay down your debt. This type of personal loan is usually preferred to balance transfer credit cards due to the preferential interest rate.
Home Improvements
A personal loan is a great way to finance home improvements, such as remodeling a kitchen or bathroom, adding an outdoor deck, or replacing old appliances. This is one of the most common reasons people take out personal loans (or a home equity loan)
Medical Expenses
If you don’t have supplemental health insurance, a personal loan can cover medical costs that the province or your plan may not cover. Be sure to check your coverage before undergoing any optional procedure.
Buying a Car
If you need a car but don’t have the cash available to purchase one outright, a personal loan can help. By taking out a car loan, you can spread out payments over several months or years, making it easier to afford the vehicle of your dreams.
Large Purchases
A personal loan can help you purchase big-ticket items like furniture, electronics, or yard machinery. It’s often cheaper to go this route instead of using in-store credit, which can be very expensive after the introductory period ends.
Tax Payments
If you’re behind on your taxes, a personal loan can be used to cover the costs. Depending on the situation, you may get a better interest rate than the rate charged by the CRA for late payments.
Emergency Expenses
Unexpected expenses like car repairs or medical bills can quickly add up and put you in a financial bind. A personal loan can help you pay for these unexpected expenses without having to dip into savings.
Wedding Expenses
Planning a wedding can be expensive. A personal loan can help you cover the costs of everything from catering to decorations without going over budget.
Education Costs
If you’re looking to further your education, a personal loan can be used to finance tuition and other educational expenses. This is a great way to “level up” for the future once the government student loans run out.
Business Expenses
If you’re starting a business or need to purchase equipment, a personal loan can be used to cover the associated costs. Be sure to make a business plan before taking out any loan to start a business. You can thank us later.
Vacation Expenses
A personal loan can help you finance your dream vacation without having to dip into savings or maxing out credit cards. With the ever-increasing cost of flights and hotels, this can make your special trip a reality.
Moving Expenses
Whether you’re relocating for a job or simply looking to move across town, a personal loan can cover moving expenses. This is becoming more common as most employers won’t cover moving expenses for their employees any longer.
Legal Expenses
Are you facing legal fees like attorney costs? A personal loan can help cover these costs so that you don’t have to dip into your savings. It’s certainly better than going it alone.
Why Your Next Personal Loan Should be From SkyCap Financial
At SkyCap Financial, we understand that life can be unpredictable, and you may need a helping hand to cover expenses. That’s why we offer unsecured personal loans with competitive interest rates and flexible repayment plans.
Our online application process is fast and easy so that you can get the funds you need quickly. Plus, our team of experienced loan specialists is always available to answer any questions you may have. In addition, we also offer SkyCap University, a free online course to help you better understand the loan process.
We believe in being transparent with our customers and providing excellent customer service. We strive to make the process of taking out a loan as smooth and hassle-free as possible. So if you’re looking for a personal loan, apply today.
Final Thoughts
There are many reasons why someone might take out a personal loan, but it’s important to research and make sure the choice is right for you. Loans come with interest payments and potential fees, so be sure the loan fits your budget and future plans. Working with a reputable lender is key to ensuring the best rate and terms if you decide to pursue a personal loan. Understanding how these loans work can help you make smart decisions and secure the funding you need.
Are you looking for a personal loan? SkyCap can help! We specialize in personal loans for Canadians with challenging credit reports. Apply online today using our secure application form.
