Is a Personal
Loan Really
Necessary?

While there are legitimate reasons for taking out a personal loan, you will want to think long and hard before doing so. As with any financial decision, you need to think ahead and make decisions based on facts not on your immediate desires.

Do I Really Need a Personal Loan?

Ask yourself is this a true emergency or if it can wait. Becky’s root canal might not wait but maybe the new boat could stay put until next month. Loans cost – plain and simple – and not just in the amount you take out but interest added on to the principal. So you may want to consider some alternatives before applying for a personal loan.

Be Patient

If it is not a true emergency, then waiting until you can save enough to buy what you want can be a wise choice. You may find that after awhile you do not even want the item. Taking out a personal loan would have ended up being something you regretted in that case.

Use Your Savings

Do you have money put aside for a rainy day? Well this could be your day. While blowing all your savings on a vacation might not be good for the future, putting enough aside into your savings to go at a later date could be wise. This would save you money in the long run, no interest involved this way, and your money earns interest while you are waiting to spend it.

Family & Friends

If it is a small amount that you need do you have family of friends that can help out? None of us like to be beholden to our families and certainly do not want friends pestering us to pay them back. But if you immediate need is quick and not a lot this might be a good alternative. Again you would not be paying interest. Remember, do not let the debt slide thinking it is only family though, this could be worse then debt collectors!

Other Options

Some places of employment offer loans to their employees. Your interest would be reduced here but if you change jobs you would have to have it refinanced somewhere else. You could also get a second mortgage or mortgage extension. But again, this puts your home at risk and ends up adding up to more money out of your pocket in the long run. Not real good for something you do not really need.