When Money is Tight: Are Personal Loans a Good Solution?
I don’t like debt. In my life I’ve signed for one car loan and two mortgages. In fact, I dislike debt so much that I paid off my car loan within a year of buying it. The mortgages, which are held on two separate properties, are my only outstanding liabilities.
I realize I’m unbelievably fortunate and I am grateful for all that I’ve been given. My parents paid for my college education and with my degree I was able to work my way up from a starting salary of $32,000 to a mind boggling six figure salary. When I unexpectedly fell ill I had amazing health insurance and great employee benefits including short term disability that enabled me to stay home and heal for nearly five months.
I know that my life could easily be very different. If you change just one key variable I could have ended up in quite a bit of debt. What if I had taken out student loans? What if I hadn’t found such a high-paying career or had the courage and conviction to live within my means? What if my employer didn’t have great health benefits and I did not receive short term disability?
While we often talk about debt associated with carelessness and overspending I know that there are also a lot of people in the world with unfortunate and uncontrollable circumstances that leave them without the money to pay necessary bills. Without short-term-disability and amazing health benefits I believe I would have been one of them.
If you find yourself in need of a life line what do you do? Many people turn to friends and family for money, but borrowing from relatives can be quite tricky. You never know how money can impact a relationship and a lot of people aren’t willing to risk the repercussions. You can use credit cards to pay your bills, but they often charge exorbitant interest rates. If you are a homeowner you can take out a home equity loan, but a lot of people fear putting the house up as collateral.
So if you don’t want to take out a new credit card, borrow money from your family or apply for a home equity loan, what can you do? You can apply for a personal loan. A personal loan works much like any other loan. You pay a fixed amount of money in equal installments over a period of months or years. Unlike other types of loans there is typically no collateral to secure the loan, so there is no fear that your car will be repossessed or your home foreclosed upon.
The terms can vary widely for these types of loans so it’s best to compare rates to figure out if this is the best alternative for you.
Of course, you should make certain to consider all of the alternatives before entering into any financial agreement. Weigh your options, compare terms and determine which is the right solution for you.
*Note: This post contains sponsored links.
Entry filed under: sponsored. Tags: .