Is It Ever A Good Idea To Take Out A Personal Loan?
You know you are an adult when you dread the sight of the mail truck. When you are a child, postal mail addressed to you is a cause for literal celebration; almost every piece of mail you receive is a holiday greeting card or a party invitation. When you are an adult, however, your mail is a constant reminder of your dismal financial situation. Just as bad as the steady stream of bills and collection notices are the advertisements and promotional offers for financial products that your broke self must desperately need. It’s bad enough to pay your monthly bills on payday only to find out that you have twenty dollars left to last for the rest of the month; receiving three offers for personal loans in the mail the following day only adds insult to injury. It may be tempting to apply for a personal loan if the alternative is to walk to work every day and eat instant ramen noodles for dinner every night, but the last thing you want is more loans to make payments on. A Plantation debt consolidation lawyer can help you decide whether a personal loan would make your financial situation better or worse.
Whoever Said “Don’t Borrow to Pay for Necessities” Has Never Experienced Financial Hardship
Personal loans are simultaneously the best and worst kind of loan. The bank simply lends you money, and you repay it in installments, and in the meantime, you can spend the loan money on anything you choose. Unlike mortgages, student loans, and business loans, it does not require you to buy a house, enroll in a university, or open a business. The bad news is that the interest rates on unsecured personal loans tend to be high, and in many cases, there is even a financial penalty for early payoff. In other words, personal loans are not a quick fix for getting out of debt.
You have probably heard personal finance advice to the effect that if you are borrowing money to pay for necessities, your finances are getting worse, not better. That is only part of the story. The best way to use personal loans is for unavoidable expenses that you couldn’t afford when you incurred them. Debt consolidation is a responsible use of personal loans; another one is to pay medical bills. In other words, a personal loan is the lesser of two evils when the alternative is multiple debts that keep accruing interest and late fees. Don’t use personal loans for splurges. If you can’t afford it with your savings or your credit cards, you probably can’t afford to pay off a personal loan.
Weighing the Pros and Cons of Personal Loans
There is no one-size-fits-all solution to the debt pandemic, but personal loans help in some instances. A South Florida debt consolidation lawyer can help you decide whether consolidating your debt with a personal loan is the best way for you to improve your credit score. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.