What Can and Can't I Use a Personal Loan For?

Personal loans are a good option when you need extra funds quickly. Whether you’re trying to fund a project, or emergency, you can use a personal loan for a whole host of things.

How Do Personal Loans Work?

These are unsecured personal loans, which means they don’t require collateral to get approved. Like with any loan, there are terms the borrower must agree to. There’s the interest rate, which is a percentage you’re charged when financing the loan. Every loan also has a specific amount of time the borrower has to pay it back. Lastly, your monthly payment is the amount you will pay every month to pay the loan off on time.

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When To Consider a Personal Loan? 

It’s important to consider whether a personal loan is your best option for getting extra cash, no matter the purpose. There are a few factors to consider before applying for a loan from Balance Credit. Here are a few reasons a personal loan may be a good option for you: 

• Your current credit limit isn’t enough to cover the amount of money you need. 
• You have a bad credit score, so you don’t qualify for traditional loans or credit cards. 
• You don’t have the collateral required for approval from other lenders.

We understand that people’s financial situations are sometimes out of their control. That’s why Balance Credit offers personal loans for bad credit. Your credit rating shouldn’t keep you from accessing the money you need. 

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6 Uses For Personal Loans 

There are no restrictions on how you use the funds acquired through a personal loan. The terms do not specify what you have to use the money for. Understanding the various uses of personal loans can help you decide if it’s the right choice for you. 

Emergency Funds 

Sometimes, you find yourself in need of extra funds to cover any number of unexpected expenses. Getting an emergency loan means you can handle the sudden cost of a necessary home or car repair or even a medical emergency. This can take the pressure off a stressful situation and give you peace of mind, even with a low credit score. 

Debt Consolidation

If you’re struggling to juggle multiple debt payments and interest rates, using a personal loan for debt consolidation means having only one payment and rate to keep track of. The personal loan can be used to pay off your debts. You then just pay the debt consolidation loan off every month. This might help improve your credit score if you’re dealing with a less-than-desirable rating. 

Large Purchases 

If you need to replace a costly item like your computer, a personal loan is perfect for this large purchase. It will allow you to buy the replacement you need or other expensive items, like a new mattress or appliance when you need them. Getting a personal loan for this purpose means you don’t have to wait until you have the money saved, which can take some time.

Home Repairs or Renovations 

While there are other ways of financing home renovations, a personal loan can be used for home improvements and might be the best choice if you don’t qualify for other financing methods or don’t have enough equity in your home. Not all home projects, such as painting or redecorating, need a large budget. Therefore, a home improvement loan can be a good way to get those smaller amounts without tapping into your home’s equity or opening up another line of credit. 

Personal Expenses

Things like home improvements, medical expenses, or funerals can cost more than you might be prepared for. Taking out a personal loan can get you the money you need to cover any personal expenses you might need extra cash for. It can also be a good way to subsidize your budget if you need additional funds to achieve your goals. Personal loans can also cover moving expenses, like trucks or storage units, or other life events.

Medical Bills 

You can’t always help when you need to go to the doctor or hospital and insurance doesn’t always cover all the care you need. If you’re struggling with medical bills, a personal loan can lighten the burden of these debts and consolidate your medical debt to make it easier to pay off.

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What You Can’t Use Personal Loans For

While personal loans give you the freedom to use the funds for a myriad of reasons, there are still a few times that using a personal loan is a bad idea or isn’t allowed. 

• Down Payments: Using borrowed funds to pay for another larger financed item like a car or house is typically not allowed. The terms of most mortgages prohibit the use of funds in this way. In the same way you can’t put the down payment for a car on a credit card, you also cannot use personal loans to come up with that money. 
• Illegal Activities: Another prohibited use of personal loans is using the money to fund illicit activities. Even though gambling is legal, it is still not allowed to use any borrowed funds to gamble in any way. 
• School Tuition: You cannot use a personal loan to pay your college tuition because there are federal regulations surrounding loans used for educational purposes, and not all lenders meet these requirements. Additionally, you cannot use a personal loan to pay off student loans. 
• Business Expenses: Some personal loans specify that you cannot use the money for business purposes. Even if there isn’t, using a personal loan for business-related expenses won’t help you build business credit and might negatively impact your personal finances. A better option is to apply for a business-specific loan or use a business credit card if you need extra cash. 
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Get a Personal Loan From Balance Credit 

Now that you’re informed about what you can and can’t use a personal loan for, you can take the next step in getting the money you need. Getting a personal loan from Balance Credit allows you to take care of any expenses, planned or unplanned. 

Learn More About Our Personal Loans

Whether you want to plan a fun project or need emergency funds, getting a personal loan from Balance Credit is easy. Apply online and get your money in just a few days!  

Even if you think your credit rating might disqualify you, Balance Credit offers personal loans for bad credit because your financial situation shouldn’t preclude you from getting extra cash when you need it.