If you already have debt (loans, credit cards, and payment plans), then the thought of taking on additional debt or considering another loan might not sound like a good idea. While taking on more debt for unnecessary expenses probably is not the best financial move to make, some financing can be good. For example, some small personal loans can actually help you improve your financial health – especially if you have existing debt. At Copper State Credit Union, our lenders love using finance and small personal loans to help borrowers improve their financial health and ease the strain on their monthly budgets. The following are three ways a small personal loan could help your finances:
- Consolidate Debt - Small personal loans can be used to consolidate debt. Borrowers often use debt consolidation loans to pay off several high interest accounts, most commonly credit card debt. This type of loan often allows the borrower to pay down debt more quickly at a lower cost in interest. In their article on debt consolidation, Investopedia reminds borrowers that consolidation loans do not erase debt, but transfer several debts into a single, more easily managed loan. A Copper State CU representative can help you determine whether a debt consolidation loan is right for you.
- Manage Monthly Payments - Whether you have fifteen payments to remember per month or a single payment which is larger than you would like, you can better manage these monthly payments with a small personal loan. Consolidating several payments into one will reduce the risk of forgetting a payment and incurring a late fee or a bad mark on your credit report. A small personal loan might also allow you to lower a single monthly payment by refinancing a loan with a large monthly payment due to a high original balance or high interest rate.
- Responsibly Cover Emergency Expenses - Emergencies happen to all of us. Whether an unexpected medical expense or necessary vehicle repairs, emergency expenses are unavoidable. According to CNBC, about 57 million Americans have no money saved for an emergency. Rather than letting these bills pile up, go to collection, or charging them to a high interest credit card, a small personal loan will ensure the bill is paid at a minimal interest cost to you. In addition, the payments you make toward your unexpected emergency expense will show up on your credit report, improving your credit history (as long as payments are made on time).
In addition to debt consolidation, potentially lowering your monthly payment or condensing all payments into only one monthly payment, and covering emergency medical or dental expenses as a back up option to using an emergency savings account, well-managed and re-paid small personal loans will improve your credit, making you more attractive to lenders for loans you might take out in the future, such as a mortgage to purchase your first home or a commercial loan to start your own business. To learn more about how a small personal loan could help you and how to apply, we encourage you to speak with a Copper State CU representative.
Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.