What are the most common reasons for getting a personal loan?

The most common reasons for taking out a personal loan include medical bills, home improvements and debt consolidation. However, personal loans can be used for almost any purpose, making them one of the most versatile and common loan types.

The best reasons to get a personal loan are to pay off unavoidable, urgent expenses (e.g. hospital bills) because they can strike at any time and put a financial strain on you. Another good reason is to make investments that will pay off in the future. For example, home improvement loans can increase your house’s value and livability, which is an investment that will pay off if you decide to sell.

There are several other reasons to opt for a personal loan instead of other borrowing options, too.

Reasons to Get Personal Loans

1. They are versatile. The most common reasons for applying for personal loans include medical emergencies, debt consolidation, major purchases and home improvements.
2. They can have lower APRs than credit cards. New credit card offers have an average regular APR of 22.76%. The average personal loan APR is closer to 10%, and personal loans can have APRs as low as around 4%.
3. They offer flexible funding. Most personal loan providers offer minimum loan amounts of $1,000 to $5,000. But their maximum loan amounts can stretch anywhere from $25,000 to $100,000.
4. They have decent payoff periods. Personal loans can give you anywhere from 1 to 12 years to pay off the balance. While that’s shorter than the terms offered by some types of financing, like home equity loans, it’s a lot longer than the 0% introductory periods offered on credit cards (6 to 21 months).
5. They’re fast. Most personal loan providers will approve and fund you in less than a week. And the very best options can provide funding as soon as the same day you apply.
6. They usually don’t require collateral. The majority of personal loans are unsecured, although secured personal loans do exist.
7. There are lots of options. Tons of lenders offer personal loans, from banks to credit unions to online companies. There are choices for people of all credit levels.

There are a lot of good reasons to get a personal loan, and a multitude of different situations in which you can use one. From medical bills to wedding expenses, personal loans can be used for just about anything. Below is a list of common uses for personal loans.

Best Uses for a Personal Loan

• Debt consolidation
• Home improvement
• Emergency expenses
• Vehicle financing
• Large purchases
• Medical bills
• Wedding costs
• Vacation costs

If you’re ready to start your search, you can compare personal loans on WalletHub and get pre-qualified with multiple lenders without hurting your credit score.