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How a personal loan could help you

[Jan 28, 2011.]

 

Borrowing money isn't always the best option when you need to get your hands on some cash. But there are circumstances where you may be forced to consider getting a personal loan. Here are some times when an emergency loan could help you through tough times.


It's a matter of life and death


An accident or unexpected illness can do a whopper on your finances. If you are among the more than 50 million Americans who are uninsured, you may be forced to blow through any savings you have to get medical care. But once that money is gone you may think about getting a loan. While a loan can help, make sure you explore any assistance programs offered by your medical providers before borrowing money.


Your kid may be kicked out of school


Not paying tuition could interrupt your kid's education. A personal loan could buy another semester for your student, giving him or her time to look for a job and make more permanent plans to pay for an education. However, it is not a good idea to over-extend yourself borrowing money for college expenses if you have little or no retirement savings. Remember, your student can work while attending classes, transfer to a less expensive school or even cut back to part-time status.


You need transportation to work


If you live on a bus or train line you should be able to get to work by commuting. But not having public transportation available means you need to walk, find a carpool or get your own vehicle. A loan could allow you to get an inexpensive used car. If you have a limited income, do not get trapped into making payments on a new car loan.


Avoid high-interest fast loans


It may be tempting to go to a payday loan shop to get a fast loan. But the cost of getting this type of loan is high. Loans from payday lenders have exorbitant annual percentage rates (APRs). In some cases APRs can run well above 300 percent. Even if you think you're only getting a payday loan "just this once," if you're not able to pay it back within the term you may find yourself being sucked into a cycle of debt you have trouble escaping.


Be cautious about applying for a personal loan. Try to find other alternatives to borrowing money. But if you do resort to getting a loan, take time to shop around and compare deals.


 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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