What Can I Use A Personal Loan For?
Personal loans can be used for a variety of purposes, but are typically for large expenditures, such as starting a business, paying medical bills, consolidating high-interest debt, or paying for a wedding, funeral, or college tuition.
In this article we’ll discuss personal loans and provide answers to popular questions including, “what can you buy with a personal loan?”
Credit Union of Southern California (CU SoCal) is one of the fastest growing credit unions in Southern California, providing checking, savings, and loan products with quick pre-approvals, no application or funding fees, and other great Member benefits.
Call CU SoCal at 866.287.6225 to schedule a free no-obligation personal loan consultation, or apply online today!
What Is a Personal Loan?
A personal loan is typically provided by a credit union or bank and can be used for a wide variety of personal expenses.
What Can be Used as Collateral for a Personal Loan?
Personal loans can be secured
. A secured loan requires the borrower to pledge an asset such as property, the balance of a deposit account, or a car to “secure” the loan. If the borrower does not pay the loan in full the lender can takes possession of the asset that was used as collateral. A mortgage loan and a vehicle loan are both examples of secured loans.
Credit Union of Southern California (CU SoCal) offers secured personal loans that can be secured using the borrower’s Savings or Share Certificate (the credit union version of Certificates of Deposits) as collateral. This convenient loan lets members borrow up to a certain percentage of their account balance in the form of a loan.
loan is offered by a lender based on the applicant’s creditworthiness (not collateral or security). No collateral is needed in order to get an unsecured personal loan
CU SoCal offers both secured and unsecured personal loan options, to satisfy a wider range of borrower needs.
For more details read: “What are Personal Loans?
Where to Get a Personal Loan
You can get a personal loan from a credit union, bank, or an online lender. Each lender will have unique interest rates, loan terms, and fees, and possibly a prepayment penalty, so be sure to shop around and get all the details before you sign.
The best place to start is where you do your banking now. Your current bank will have quick access to your savings account information that will help speed-up the loan approval process.
Your current credit union or bank may be able to offer a promotional interest rate, low or no fees, and other member or client benefits.
There are three main options when it comes to where to get a personal loan:
Traditional banks tend to have higher credit score and income requirements than credit unions. And if you have bad credit, getting a good interest rate on a personal loan could be challenging. If you need the money in a hurry, banks may take longer to release funds, so ask how long the approval and funding process will take before you apply.
As a not-for-profit organization, credit unions reinvest profits back into the organization, so Members benefit from lower interest rates on loans. Credit unions provide members with personalized services, and other advantages, including no application, no prepayment penalty, and no funding fee. CU SoCal can provide financing from $500 to $30,000.
While numerous online lenders offer personal loans, because they are entirely online, with no storefront, they can’t offer the personalized customer service of a credit union or local bank. If you use an online lender be sure to compare rates and loan terms and fully understand the terms of the loan. In the past, it was determined that a number of online lenders were not legitimate.
How to Apply for a Personal Loan
Applying for a personal loan from CU SoCal is quick and easy. If you’re already a Member, you can apply for a personal loan using the Quick Apply widget in Online or Mobile Banking, visit any branch or call our Member Care Center at 866.287.6225.
If you are not a Member as yet, it’s not a problem either! All you need to do is open a savings account and then apply for a personal loan. You’ll become a Member in the process.
We require the following information:
- Your Social Security number
- Driver’s license, state-issued ID or U.S. passport
- Credit or debit card or checking account number to transfer funds
It couldn’t be any simpler — Apply Online Now!
For more details read, “How to Get a Personal Loan
What Are Personal Loans Used For?
Once approved for a personal loan, the money will be deposited into your account and you may use it for any expense, large or small, including:
Refinancing Credit Card Debt:
Use a personal loan to pay off high interest credit card debt all at once. You’ll then make fixed rate monthly payments on the personal loan amount.
Consolidating Multiple Types of Debt:
If you have several high interest rate loans, you can use a lower interest rate personal loan to pay off the high interest loans. Consolidating debt into one loan is easier to manage and you could save money by paying less interest.
Financing Home Improvements:
Want to renovate? Many people choose to use a personal loan, rather than a home equity loan for home renovations. Because a home equity loan uses the home as collateral, your home could be at risk if you aren’t able to pay back the loan.
Making a Large Purchase:
Personal loans can be handy if you suddenly need new appliances. For example, CU SoCal offers loan amounts from $500 to $30,000, so buying a new refrigerator, washer, dryer, and other large items is possible.
Financing or Refinancing a Car:
While auto loans tend to have lower interest rates than personal loans, an auto loan uses the car as collateral. This means that if you cannot pay the auto loan’s monthly payments, the car could be repossessed by the lender. A personal loan will likely have a higher interest rate but you won’t be in danger of losing the vehicle if you default on the loan. (Be aware that non-payment of any loan will result in damage to your credit score, and you may be turned down for subsequent loans.)
Paying Off Medical Bills:
Some medical expenses may not be covered by health insurance, or may not have health or dental insurance. In these cases, a personal loan can be a good choice because your health should always be a priority.
Starting or running a small business can get expensive. Computers, printers, and other expenses add up. A small business loan from a bank or credit union could be more difficult to get approved for due to the application requirements (such as proof of cash flow and accounting reports) can be difficult to get. Getting approved for a personal loan is based on credit worthiness and a look at your credit score, and in some cases personal income.
Financing a Wedding:
This happy occasion is one of the most expensive events that people will pay for in their lifetime. With a personal loan, you can get the funds you need to start booking a caterer, photographer and florist. The only downside is that you will be paying the loan interest on these services, so the final cost will be higher. Many couples will use a personal loan to get them through the wedding day, then they pay off the entire loan with cash they receive as gifts.
Paying for Moving Expenses:
Moving companies typical charge by the mile and by the pound, depending on whether the move is local or long distance, such as out of state. Get some estimates from movers to find the lowest cost, and do the numbers. Remember, you’ll be paying interest on the personal loan, so the final cost of the move will be higher than simply the cost of hiring a moving van.
Paying for a Funeral:
While some people have saved money specifically for their funeral in order to alleviate the financial burden on family members, most people do not have funeral funds, which leaves families scrambling to pay. A personal loan can be a fast, easy way to get the money needed to honor a loved one.
Going on Vacation:
Taking time off from work and planning a vacation with your loved ones is always a great idea, and personal loans are a great resource to meet such expenditures.
Why Savvy Consumers Choose CU SoCal
For over 60 years, Credit Union of Southern California has been proudly serving the Southern California community. We provide our members with checking, savings, personal loans, and other loan products with quick pre-approvals, no application or funding fees, and other unique advantages.
Apply For A CU SoCal Personal Loan Today!
Please give us a call today at 866.287.6225 to schedule a no-obligation consultation with one of our personal loan experts.