The need for a loan can be unexpected, or merely a result of a planned expense that costs more than you thought, and for which your savings fell short. It is not a reason to worry or feel badly about yourself. Even with the most well-thought-out budget and careful planning we can find ourselves in need of cash. At these moments, it is easy and tempting to turn to our credit cards to make up the shortfall. It’s fast and painless, or at least it appears that way. But using your credit card for those unexpected expenses, or even to consolidate debt, could end up costing you much more than the initial outlay. It is much better to seek out a personal loan.
However, let’s say you are not a stellar candidate for a bank loan, what do you do? You apply for a peer to peer loan, a platform tailor made for the majority of consumers who either do not want to deal with banks or do not meet the strict criteria for eligibility employed by bank loan officers. Marketplace lending, or P2P loans, are the hottest financing vehicle in the marketplace today, and for good reason. They open the door to millions of consumers who need access to much needed cash, quickly, easily and in a way that helps them come out of debt and improve their financial health. The goal of peer to peer lending is to help, not penalize.
Let’s look at 5 examples of when a personal loan is much better than tapping your credit cards.
- Your Wedding
According to The Knot 2016 survey the average wedding today costs a little more than $35,000. Naturally, prices depend upon where you live. This does not include the honeymoon. Maybe you have been saving up for your special day, but it is fast approaching and some of your vendors are looking for an upfront payment. You don’t have the money. You can charge those expenses, but the interest rate will cause the debt to mushroom way beyond the actual costs of your wedding. Plus if you max out your credit cards, and then you want to apply for financing for, let’s say a home or car, you will face difficulties. A personal loan from a marketplace lender such as Peerform gives you the flexibility of choosing a loan amount that fits your budget. Repayment on the loan is done through automatic installments deducted from your bank account, no need to come home from the honeymoon to a pile of bills, and your financing terms will be much better than your credit cards.
- Home Improvement
Your home improvement projects may appear to be perfect candidates for charging to your credit card, especially with the many in-store credit cards that offer cash-back and other incentives. However, these offers tend to be seasonal and come with a much higher interest rate. Some stores offer deferred interest rate on their in-store cards, but once the interest-free period is over, the APR can be very high. A personal loan, for the amount you need, at a modest interest rate, is much preferable. You can apply for a peer to peer loan online. You will have the answer and the cash you need quickly so you can go ahead and start knocking down walls.
- Uncovered Medical Procedures
Many medical procedures that are critically important to your overall well-being are not covered, or are minimally covered by your health insurance package because they are classified as “elective.” Elective procedures include: laser vision correction, hip or knee replacement surgery, fertility treatments, cosmetic surgery, dental implants and others. But there are additional medical costs that you might also find yourself facing alone, such as a trip to the emergency room or treatment from a specialist outside the network. Here is another situation where, for expediency sake, you might be tempted to use your credit card. But, unless you are able to pay the bill in full when it arrives, you will find your medical expense chasing you around much longer than you want. If you are using your credit card for other things, the combination of it all could throw you into serious credit card debt. A personal loan from a peer to peer lender is the better way to go.
- Moving out of Town
There are many reasons why you might find yourself facing a long-distance move—better career opportunities, better schools, better environment, a great graduate program—the reasons are endless. Unless your company is paying for the move, you are going to find yourself with considerable expenses. The moving company is only a part. There are all of your expenses on the road, disconnection and connection fees, insurance, deposits and more. All of these can easily be paid by your credit card, but who wants to start life in a new place with credit card debt? A personal loan for relocation expenses will help you meet all of your financial obligations on time, to be repaid in a reasonable period of time, keeping your credit healthy and freeing up your mind to think about more important things.
- Debt Consolidation
When your credit card debt is spiraling out of control, an attractive option seems to be to apply for a balance transfer card, especially with the 0% introductory rate. This is only a good option if you absolutely can repay the bill by the end of the introductory period. After the free interest period is over, the interest can be considerable and you will have accomplished very little in terms of reducing your debt and relieving your stress. Peer to peer lenders offer personal loans, especially to consumer who do not have “excellent” credit as defined by traditional lending institutions. A personal debt consolidation loan comes with competitive interest rates, no hidden fees, an easy repayment plan, and at the end, your credit score will improve.