While most consumers are aware of and have likely taken advantage of, a car or home loan, they may have little or no experience with a personal loan. Unlike many other types of lending instruments, personal loans are unsecured, meaning they are not tied to a car or house or some other type of collateral. Instead, lenders use information about the borrower to help them decide whether to make the loan, including the borrower's income and previous credit history. If you are interested in personal loans and would like to learn more about them, these financial tips can help.

Paying off credit card debt

High-interest rates on credit card balances are a problem in many households, especially when paying them makes it difficult for consumers to pay down the balances. One way in which consumers get out from under the high-interest rates is to take out a personal loan to pay off the higher interest rate credit cards. This is especially effective when consumers have more than one credit card with an outstanding balance. Instead of having to budget for multiple high-interest credit card payments, they can focus on repaying just one personal loan. 

Covering unexpected emergencies

When the transmission needs to be replaced, the furnace fails, or someone in the family unexpectedly needs expensive medical or dental care, families may need to find a way to access thousands of dollars very quickly. If the family does not have savings to cover these emergency needs, obtaining a personal loan to cover them may be the fastest, easiest way to do so. Many personal loan lenders are able to grant personal loans quickly, often in as little as a day or two from the date of application. 

Additional ways to use personal loans

Personal loans can also offer a way to provide the funds to pay off student loans, take a much-needed vacation, or cover one-time expenses such as sending kids to camp or dealing with unexpected costs for a family funeral or other need. An unsecured personal loan can offer consumers a convenient, readily available financial tool. To learn more about personal loans and how they can benefit your family, consumers should consider contacting a reputable personal loan lender in their area. Like all forms of loans, buyers should always make sure they understand all costs and fees, including the interest rate that will be charged and the repayment terms.