Personal loan right for you?

From purchasing a vehicle to renovating a home to covering an emergency, we all have different financial goals. For those without the immediate funds to achieve these goals, taking out a personal loan can be the right way to go.

Let’s examine a few situations where a personal loan might be something for you to consider:

You want to renovate your home:

Improving your home is almost always a wise investment. If you have a project in mind that will add value to your home (such as an extra bathroom or a revamped kitchen), a personal loan can be a great way to finance it without tapping into your equity. The right home renovations can definitely provide a solid return on your investment.

You run into unexpected emergency expenses:

If an emergency expense blindsides you, consider borrowing from a line of credit. A line of credit gives you access to a pool of funds that you can use whenever and however you need. You're free to borrow for any reason, at any time. You’ll save yourself a lot of stress by getting immediate access to funds to cover your expenses.  

You want to purchase a new or used vehicle:

Many of us don’t have the cash upfront to pay for a vehicle outright. In these instances, an auto loan can be an appropriate way to finance the vehicle. As an added benefit, having a paid-off auto loan on your record often means you will get a better rate when it comes time for you to take on a mortgage, as this finance writer figured out.

And of course, each of these loans offer another bonus, if you are able to repay on time—an improved credit rating.

Prospera Credit Union offers distinct loan types based on your needs. As outlined in this Bankrate article, getting a loan through a credit union instead of a traditional bank can be a far smoother experience for the consumer. Credit unions have the reputation of being friendlier and more community-oriented than traditional banks. They’re interested in serving their members, and can help you with a loan.

Here are some guidelines to heed when taking out a personal loan:

  • Generally speaking, taking out a loan for something like a personal vacation is not recommended.
  • Before you decide to borrow money, think about your motivation for wanting the loan. Will the money be used wisely or impractically?
  • Limit the number of loans you apply for. Most loans leave a “footprint” on your credit record, which lenders will check before approving your latest loan. Having lots of applications on your record might make you seem like someone with perpetual financial difficulties, which causes lenders to view you as more of a risk. 
  • Make sure you can pay the loan back on time, but also be aware that some lenders apply an early repayment charge if you settle your loan ahead of schedule.

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