The Five Reasons To Take Out A Personal Loan with Union First Funding
The Five Reasons To Take Out A Personal Loan
Applying for a loan can be an intimidating process. It’s never taught in school and there are a lot of uncertainties that go into it. Will I get approved? How much will I have to repay? How long will I be paying back the loan? I need the money but is this a smart idea for me long-term?
If you’ve ever considered taking out a loan then you’ve probably asked yourself some of these questions. If you have, you’re definitely not alone! Don’t let the uncertainty behind getting a loan stop you from trying.
Applying for and getting a loan can be one of the best decisions you ever make because it can open up a whole array of possibilities that you may have never even thought were possible. Getting a loan can put you and your family in the best neighborhood. It can get you the money you need to start your own business. It can also send your kids to the best school and make sure that they’re being set up for success!
Let’s take a look at all of the different loan uses:
Why would I need one: Business loans are used when you want to start your own business but don’t have the capital for it. It can help you get a fledgling business off the ground by giving you money for things like an office, employee payroll, and other startup expenses.
Advantages: Sometimes all you need is the initial lump sum of money because you’re positive your idea will work! You might already have early confirmation that it will. Business loans are nice too because you’re not giving up equity in your company. Just getting some cash that you can pay back.
Disadvantages: There are some restrictions on what you can do. These types of loans cannot be used to purchase real estate or pay back debt.
Key takeaways: Before applying for a business loan, the most important thing to do is validate your business as this will be your main way of repaying the loan. Make sure that you’ll be earning enough money to cover your monthly payments to the bank.
Why would I need one: These are used to purchase a new car. Generally, you would be using the car as a means to pay off the loan. For example, driving it to a new job.
- Increase your earning potential - Getting access to a car will be able to broaden the geographic region where you can work. This will allow you to accept roles that may be a little bit farther away.
- Build a good credit history - Auto loans are usually a good way to build your credit history. That’s because they’re not too big and are relatively easy to repay.
- Boost your reputation - Driving a nicer car can help tell your story for you. This can be important if you work in an industry where respect is important.
- Adds another monthly expense - When possible, it’s always best to avoid adding monthly expenses unless it’s 100% necessary.
- Interest - As with all loans, you’ll end up paying a little bit extra in interest to the bank.
Key takeaways: Depending on what you’re looking for, getting an auto loan is usually a good idea. Although, make sure that you are not stepping outside your means.
Home loan (or mortgage)
Why would I need one: To finance the purchase of a home.
Advantages: Home loans, more than others on this list, are almost always necessary. That’s because very few people have hundreds of thousands of dollars in cash that would be necessary for buying a home.
- Long-term commitment - You’ll be paying off a home loan for 15-30 years.
- The cost of the property can change - You’re technically buying an asset, which means that the price of your home can change. It would be unlucky but it’s possible that you buy a home only to see it decrease in value over the next few years.
Key takeaways: For many Americans, a home loan is a necessity rather than an option. Of course, you can always rent for your entire life but this isn’t ideal. Homeownership is a staple of the American Dream.
Why would I need one: To pay for the cost of tuition at a university.
- Allows you to receive an education - This will set you up for success for the future and give you access to opportunities that you wouldn’t otherwise have.
- The college experience - Some people say that they learned more at college outside of the classroom than in it.
- Student loan debt - The average student loan debt in the United States is $31,172.
- Interest - You’ll pay much more than the cost of attendance in interest over the course of your loan.
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 something that nobody can ever take away a college education.
Debt consolidation loans
Why would I need one: A type of loan that allows you to repay other loans. This may sound excessive but there are actually lots of advantages to a debt consolidation loan.
- Pay lower interest - Usually, a debt consolidation loan will offer you a much better interest rate. This can save you thousands of dollars over the years.
- One monthly payment - Instead of juggling multiple different loan responsibilities you can focus on repaying one.
- Boost your credit score - Now that you’re able to meet your payments on your debt, it will boost your credit score.
- Approval difficulty - Debt consolidation loans can be hard to get approved for because they’re so popular.
Key takeaways: A debt consolidation loan is a really good strategy that is usually underutilized by people.
There are a lot of different ways that taking out a loan can help you improve your financial situation. If you’re interested in learning more, feel free to give us a call by clicking the button below.
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