Personal loans can have a lot of financial benefits if you find the right loan with the right lender. The right personal loan can help you pay off a big-ticket loan or even reduce high-interest credit card debt. When used correctly, a personal loan can be a powerful personal finance tool.
How to choose a personal loan
When you’re looking for a personal loan, the first thing you need to consider is why you’re getting the loan. Once you have identified what you’ll be using the money for, you can narrow down your search.
For example, if you’re consolidating debt and you have an iffy credit score, consider talking to your credit union. If you’ve been a customer with the credit union for a while, they may be more willing to extend you a loan to help free up cash than another lender.
Keep in mind that if you take out a loan to consolidate debt, they may require that you close credit card accounts or require that you let them submit payments on your behalf to ensure you use the funds as requested. Make sure your credit union offers competitive rates, so you fee up as much cash as possible to pay off your debt.