Does Taking Out a Personal Loan Mean I’m Still In Debt?

Banks Editorial Team · December 15, 2017

If you’re looking for some way for money to become available quickly, a personal loan can be an ideal option—they’re one way to dig yourself out of a deep hole. But, as with all aspects of money, consider you options carefully; a personal loan isn’t free money.

 

While personal loans can help pay off credit card debt, they do still mean that you are in debt. You’re not completely cleared…just yet. Personal loans can mean that you’re making progress.

 

With credit card interest rates regularly clocking in at the double digits—close to 20 percent—chances are you’re paying (quite a bit more) for the money you’re spending. A personal loan, which is also an unsecured loan, can help cover a big expense or help consolidate your debt, all without you putting up anything as collateral.

 

Personal loans still come with an interest rate. They may just not be as high as what you’ve been paying. There isn’t an interest rate that is standard across the board for personal loans. Certain factors like income and credit score can contribute to what interest rate you’ll be looking at and paying.

 

What should I use my personal loan for?

Well, a personal loan can be used for a wide variety of things! It’s personal. It’s up to you. You have your own discretion. Generally, though, personal loans are good for long-term purchases, like consolidating your debt (that’s affixed with a sky-high interest rate!) or financing a home repair.

 

Is a personal loan still debt?

When receiving an influx of a lump sum of money, it may seem like you have money to spend. Remember that a personal loan, though, is still a form of debt. You’ve agreed to pay this amount back, over time, including the interest you accumulate.

 

If you are someone who has a mountain of credit card debt you’re trying to chip away at, taking out a personal loan can be one way to help yourself save money over the long haul, but it also provides you an opportunity to take stock of where you are financially. Are you aware of your spending habits? Are there steps you can take to get yourself back on track and shovel yourself out of credit card debt?

 

Saving up with cash and then making your purchase will keep you from paying off credit card debt month after month. Paying with cash for everything can seem daunting and can seem to limit “extraneous” expenses, but money is a finite resource. Use what you have with discretion.

 

Do your research.

When you’re looking to take out a personal loan, give yourself enough time to do research first. Loans come with different interest rates, depending on your income and your credit score.

 

These are the top personal loan lenders of 2017:

  • Upstart
  • SoFi
  • Payoff
  • Citizens Bank
  • LendingClub
  • Earnest

 

Are you ready to get back on track? If a personal loan makes sense in your life financially, then what are you waiting for?

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