We all need a little extra money from time to time. You might find yourself facing unexpected medical bills, or maybe you wish to consolidate several of your outstanding debts into one loan (and one loan payment).
If you need extra funds to cover an important expense like this in the short term—and if you have good credit—you may want to consider getting a personal loan or opening a personal line of credit.
As with any other kind of loan, consider:
- How the purchase fits with your financial priorities and goals
- Whether or not the purchase could be postponed while you continue saving
- Whether the monthly payments will be affordable
Personal lines of credit
A personal line of credit can give you fast access to a set amount of money (usually limited to $5, 000 or $10, 000) which you can borrow and pay back as needed. As you repay the funds you borrowed, you can then borrow them again and again from your line of credit without having to apply for new loans every time.
You are only charged interest on the amount of money you have borrowed from your line of credit, not on the money left in it. It’s important to note that personal lines of credit often have high interest rates and, as with personal loans, banks are more likely to approve borrowers with very good credit and proven earnings.
If you get a personal line of credit, you can usually access the funds via check, an ATM card, and Internet transfers to other bank accounts. Remember that interest starts accumulating as soon as you withdraw the money.
Many banks and credit card companies offer personal loans and lines of credit, so it pays to shop around and compare interest rates and terms.
One of the most common uses for a personal loan is to consolidate other debts into a single loan. For someone who is feeling overwhelmed with several high-interest loan payments every month, it can be a huge relief to combine them all into one monthly payment. And, consolidating your debt could help you save interest and get out of debt faster.
If you are thinking about consolidating your debts into a personal loan, shop carefully to find the lowest interest rate available. Interest rates on personal loans can vary, and typically range anywhere from 6 percent to 25 percent depending on your credit history. It doesn’t necessarily pay to consolidate your debts if the new loan has a much higher interest rate than you are already paying.
EagleBank is a bank in the Washington, D.C. metropolitan area. It may be best known for sponsoring the EagleBank Bowl, a college football bowl game first held in December 2008. The bank is operated by Eagle Bancorp, Inc., which is headquartered in Bethesda, Maryland.
Eagle Bancorp, Inc. operates as the bank the holding company for EagleBank...
HSBC Finance Corporation is a financial services company and a member of the British HSBC Group. It is the sixth-largest issuer of MasterCard and Visa credit cards in the United States. HSBC Finance Corporation was formed from the legal entity that had been known as Household International, and is now expanding its consumer finance model via...
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