The Five Reasons To Take Out A Personal Loan with Midwest Regional Funding
The Five Reasons To Take Out A Personal Loan
There are lots of reasons why it can be helpful to apply for a loan. Loans are an essential part of life that can help you pay for things you want/need without needing to have the cash. The problem is that it can be a little intimidating to apply for a loan. The topic is never taught in school so how do you know if applying for a loan is something that you should do?
Luckily, we can answer a few of your questions when it comes to different types of loans, how you would use them, and if they’re right for you.
If you have a specific question related to loan uses please give us a call!
Different loan uses
FIRST
Business loan
Main Use: As you might’ve guessed, business loans can be used to start or revamp businesses. These can be really helpful if you’re trying to get a startup off the ground or just need an influx of cash for your current business. This is especially true if you don’t want to use all of your savings on your business.
Pros: Business loans are very flexible depending on what you’re asking for. They are variable depending on what your business is and what you’ll be using the money for. The best part is that you can see an incredible return on investment from this loan since you’re investing it in your business. It’s probably the only loan you’ll take out that you can actually make money on!
Cons: Business loans come with limits. These types of loans cannot be used to purchase real estate or pay back debt.
Key takeaways: Before applying for a business loan, you’ll want to do a lot of research about your business, especially if it’s a startup. Make sure that you’ll be earning enough to repay your loan.
SECOND
Auto Loans
Why would I need one: Auto loans are used to finance the purchase of a new car.
Pros: Getting access to a car can have the ability to increase your earning potential. This is because it will allow you to accept job opportunities that are farther away than you would normally be able to work. Additionally, driving a nicer car can improve people’s perception of you. While this may not be worth going into debt over, there are cases where it makes sense.
Cons: Getting an auto loan will add another monthly expense to your balance sheet that is generally pretty avoidable. It’s rare for it to be 100% necessary to take out a loan for a new car. When possible it’s best to try to pay for a car upfront to the best of your ability. Additionally, on top of the monthly payments, you’ll end up paying more than the value of the car in interest.
Key takeaways: Getting an auto loan can be a good idea in certain situations, however, it may also be good to avoid as it creates unnecessary expenses.
THIRD
Home loan (or mortgage)
Why would I need one: To finance the purchase of a home.
Pros: These types of loans, more than others, are generally a necessity for people. Taking out a home loan can help put your family in the best neighborhood possible and set your family up for success.
Cons: These types of loans carry a long-term commitment that’s usually 15-30 years. It can be a big hassle to get out of a mortgage or try to sell your house so it’s best to make sure you’re ready to settle down when you take out a loan. Additionally, the cost of the house is subject to change. This means that your house could go down in value despite the amount you pay for the loan (although this is rare).
Key takeaways: For many Americans, a home loan is a necessity rather than an option. Due to this, you should do lots of research and get a few different offers before making a decision.
FOURTH
Student Loans
Why would I need one: To pay for the cost of tuition at a university.
Pros: The pros of receiving a college education are plentiful. It’s something that will be on your resume forever and will help open doors for you for the rest of your life. There is also lots of learning done outside of the classroom through unique experiences on college campuses.
Cons: Debt is something that a lot of students struggle with after they graduate. It can be difficult to repay because your first position likely won’t pay that much. The average student loan debt in the United States is $31,172.
Key takeaways: Depending on the size of the loan that you’re taking out, student loans can be a good idea. They will provide you with the value of a college education which will eventually be worth much more than the cost of education.
FIFTH
Debt consolidation loans
Why would I need one: This type of loan allows you to repay other loans. In doing this, you reduce the total that you’re paying each month.
Pros: Generally, these types of loans will offer a better interest rate than the one that you’re paying right now. It will also lead to just one monthly payment instead of dealing will multiple lenders and agreements. When there is only one payment it’s easier to make a plan to repay it.
Cons: Debt consolidation loans can be hard to get approval for due to their popularity.
Key takeaways: Consolidating your debt from multiple different loans down into one payment is a very smart strategy. If you find yourself swimming in debt and not sure where to turn, this path can make a very big difference, even if it’s just psychological.
The Five Reasons To Take Out A Personal Loan
Do you need to improve your financial situation? If you’re interested in learning more, feel free to give us a call, or click the button below.
Different ways your debt is hurting you
The main thing that we want people to understand is all the different ways that their debt is hurting them. Living life with debt is like running up a hill with a weight vest and wondering why other people are beating you. Once you have a good understanding of how your debt is weighing you down, you will be eager to get rid of it.
1. Having debt impacts your ability to save and invest.
Since you have to spend money each month repaying your debt, you have less income to save and invest.
2. Debt payments take away money that could be spent on other things.
Let’s say you pay $200 per month on debt payments. That’s $2,400 for the entire year! If you didn’t have to pay this debt you’re essentially adding $2,400 to your income.
3. Having debt hurts your credit score.
Not only is it difficult to make the monthly payments on your debt but it also hurts your ability to borrow more money. This could be a problem if you’re looking to buy a house or start a business in the next 5-10 years.
Okay – we’re done being negative! Now it’s time to talk about solutions.
Let’s talk about
your debt!
Having debt is usually something that most people don’t like to talk about. Granted, it’s probably not something you should bring up on a first date but that doesn’t mean you shouldn’t talk about it! In fact, talking about your debt is a really good step in the right direction. That’s because everyone’s financial situation is different. The best way to make a decision is to speak with a professional about your specific needs.
Speaking about problems can help you understand them
Since you have to spend money each month repaying your debt, you have less income to save and invest.
It helps you face your debt
Having lots of debt can easily feel like a hopeless situation and we all know that hopeless situations are the easiest to ignore. However, ignoring it won’t make the problem go away. Instead, understand your debt and let us help you attack it.
You might discover new options
We have seen every different situation in the book, trust us. There isn’t much that surprises us anymore. The good news is that we are always able to help point people in the right direction! Even if you just want to get some advice we are happy to help.
