How Personal Loans Can Help You Finance a Major Purchase
At any point in your adult life, you will face a situation where you will need to make a big purchase. Whether it’s for a downpayment for a house, a car, an expensive appliance, or consolidating a previous debt, having the means to pay for that big purchase will always come in handy. It’s not always possible to have some money saved up for a major purchase, unless you want to dip into your emergency fund or life savings. If you want a way to finance your big purchase, then getting a personal loan may just be the answer to all your problems.
A personal loan can help you gradually pay for what you buy, often with a fixed interest rate, making it more attractive than a credit card with a variable interest rate. So, if you’re interested in taking out a personal loan in Gadsden, AL, for a big purchase, here’s what you need to know about it.
When Is a Personal Loan Useful?
The “personal” part means you’re taking out this loan based on your individual credit score, your credit history, your current income and employment, and your assurance of repayment. It means it’s not like mortgages or car loans where the funds are committed to a particular asset like a house, a vehicle, or a business.
The great thing about personal loans is you can do pretty much anything you wish with the money once the lender has approved your application. Whether you want to use it to buy something expensive, or maybe you want to pay off some overdue bills or an impending renovation, it won’t really matter. What matters to the lender is how likely you are to make your payments on time, every time.
Secured and Unsecured Personal Loans
Now, whenever you’re going to take out installment loans in Gadsden, AL, you need to first consider what type of loan you’re getting. A personal loan for a major purchase can be any of the following:
Secured loans mean you’re offering the lender some form of collateral. It could be your home, a car, or even the item you’re purchasing. The purpose of collateral is to assure your lender that you can pay back the loan. Otherwise, they have the right to take possession of the collateral to recoup their losses. Because the lender is “secured” and protected by collateral, loan approval is actually quite easy. It’s also possible to negotiate lower interest rates.
An unsecured loan, on the other hand, relies entirely on your credit history and personal guarantee for approval. If you’re more confident in your credit scores and have a better debt-to-income ratio, then you won’t have trouble getting approved for a personal loan. Lenders will have much more stringent requirements, but you won’t be risking any personal property if anything goes wrong. Remember, unsecured loans will probably cost you more, and defaulting will seriously hurt your credit. Make sure you can make your payments on time.
Paying for a large purchase on a high-interest credit card can be costly, making personal loans a much better option. However, when taking out a loan, secured or unsecured, you want to make sure you’re able to make each and every payment on time, every time.
Gadsden Finance is here to help you get the means to pay for any sudden big purchases you may face. We understand that being short on funds can be quite a challenge, especially if you’re faced with a time-sensitive expense. Our team can assist you in getting straightforward, honest loans at fair interest rates whenever you need them. When applying for personal loans in Gadsden, AL, reach out to us for help. Contact us today to apply for a loan!