Let’s face it, life happens! Did an urgent car repair quote come back more costly than you estimated? Does your kid in college need a boost in funds? Finally planning that well-deserved two (full) weeks vacation? Where can you U turn when U need some extra funds? Personal loans are a popular financing option in many situations. Whether the expense is planned or unplanned, a personal loan is a convenient and flexible way to get the money you need, when you need it.
There are benefits to using this financing method as well. The most obvious is that it’s an attractive alternative to draining your savings account! But there are many more pros to personal loans.
Keep reading to learn more about the benefits of obtaining a personal loan.
What Is a Personal Loan?
Let’s first review some personal loan basics.
In simple terms, a personal loan is money you borrow from a lender and pay back in monthly installments. Most personal loans are fixed, and require regular monthly payments.
Personal loans are typically unsecured loans, meaning that they do not require collateral. A lender will look at your financial profile to determine whether you qualify for a personal loan.
What does that mean? At UMe, we consider many factors including:
- Credit score
- Credit history
- Debt-to-income ratio
A perk of being a UMe member (other than being a part of the best credit union in Burbank!) is that we don’t just look at numbers – we look at U! Your financial success matters to us so we take in the whole picture when you apply for a personal loan.
Personal Loan Uses
A personal loan can be used for just about anything! But there are a few common reasons people opt for a personal loan.
This may be the top reason members choose a personal loan. If you’re trying to manage high-interest debt from multiple sources, you may be having a hard time staying on top of things. A personal loan can gather all that debt under one umbrella with a single monthly payment.
With a personal loan, you will often have a lower interest rate and will only have to keep up with a single due date and payment, versus multiple loans with varying due dates. Keep in mind that if you’re just paying off interest each month, you’re not tackling the principal – your original loan amount. A personal loan will allow you to tackle that debt from the bottom up!
If you want to see if consolidating debt is for you, check out our handy debt consolidation calculator. We’ve got U covered!
Home Improvements or Remodeling
Looking to remodel your kitchen? Want to add a spare bedroom? Personal loans can help you do just that!
You can use a personal loan to fund a home improvement project and, as opposed to home equity financing, you won’t have to use your home as collateral. While UMe home equity financing options – such as HELOCs – are useful in many situations, a personal loan is a convenient option.
Medical or Emergency Expenses
A personal loan can be used to pay for medical, dental, or emergency expenses. Even if you’re insured, medical costs can add up – and a personal loan may be the help you need.
Plus, the application process for a personal loan is typically fast – especially at UMe! If you’re in an emergency and need the funds quickly, a personal loan won’t keep you waiting.
Special Events and Occasions
Your daughter is getting married. You’re finally ready to take that dream vacation. Your business is starting to take off.
A personal loan can be used for a slew of special circumstances. From weddings to vacations to business startups, a personal loan can help you get the funds needed for the big event. (Although, we strongly recommend that you save up money for a vacation, rather than take out debt to fund it.)
Personal Loan Pros
We could talk about personal loan uses all day, but let’s get to the pros of a personal loan! There are many benefits of obtaining a personal loan that can help you stay on financial track.
Keep Debt Under Control
One of the top reasons to get a personal loan is to consolidate debt, and it’s one of the top benefits of a personal loan too!
You may think that consolidating debt is really just moving your debt around. Okay, that’s sort of true. But the benefits are wide-reaching! If all of your debt is contained in one personal loan, you only have to pay one monthly installment and worry about one interest rate. Easy peasy.
We can help with your balance transfer and get your debt under control. A personal loan will also help lower your credit utilization ratio – the amount of revolving credit divided by the total amount of revolving credit available. Since your utilization rate is an important factor when determining your credit score, lowering it can be a win-win!
Lower Interest Rates
Interest rates for personal loans are usually lower than other borrowing options, such as credit cards. Plus, if you carry a balance on your credit card, you’ll have to pay interest. And that interest can grow over time, increasing your level of debt.
Build Your Credit
Sometimes, the act of borrowing money can help boost your credit score. When you take out a personal loan, you’re building your credit history. Consistently making on-time payments will strengthen both your credit history and credit score.
While most personal loans are unsecured, UMe wants U to have access to what U need. So if you’re looking to build or rebuild your credit, a secured loan may be an option. You simply use the money in your savings or certificate account as collateral. You’ll get low interest rates, continue to earn interest on your savings, and build your credit – all at the same time!
Regular Payment Schedule
Staying regular is important when it comes to your financial health!
A benefit of obtaining a personal loan is that you will be on a regular schedule for making payments. The term and interest rate are usually fixed, which will allow you to have a set amount to pay each month.
A personal loan takes the guesswork out of budgeting. Think about it: A personal loan with a single, fixed-rate monthly payment is far easier to manage than credit cards or other accounts with different interest rates, payment dates, and other variables.
A UMe personal loan application can be quickly filled out online or in person at our branch located in the Magnolia Park neighborhood of Burbank. The process is simple and the loan can be finalized in no time at all.
Flexible for U!
We’ve said it once and we’ll say it again… U can use a personal loan for just about anything! This flexibility is one of the top pros of personal loans.
Our loans also allow for flexibility in terms of loan terms – the length of time you have to repay your loan. At UMe, we offer flexible terms of up to 60 months. Plus you can also borrow up to $25,000. Flexibility never felt so good!
Personal Loan Alternatives
As fantastic as personal loans may seem – and we know UMe personal loans are fantastic – there are instances when another option may be a better fit.
For instance, if you have built up enough equity in your home, you can use it as collateral for a home equity line of credit, or HELOC. As we said earlier, this type of loan is similar to a personal loan but requires you to use your house as collateral. If that works for you, UMe has great interest rates and flexible terms on our HELOCs.
In addition, if you’re looking to fund your business, a small business loan may be a consideration. We’ve partnered with Accion Opportunity Fund (AOF) to make your business dreams a reality!
Personal Loans With UMe
The benefits of obtaining a personal loan are hard to beat. But the benefits of obtaining a personal loan with UMe cannot be beat!
You are eligible to apply for a personal loan as a UMe member. Once you have that personal loan, how can you manage the funds? Our free checking account is the answer to that question! Check it out today!
Disclaimer: U matter to Me (all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!