The Five Reasons To Take Out
A Personal Loan
with Republic First Funding
Let’s take a look at some of the most common loan uses
Have you ever considered applying for a loan but aren’t quite sure if you’re making the right choice? You hear a lot of horror stories of people getting trapped in a bad loan, being piled under enormous amounts of debt, or taking out loans for the wrong reasons.
Don’t let these stories lead you the wrong way. There are definitely lots of ways that taking out a loan can help you. Done the right way, a loan can be a very powerful tool in your financial arsenal!
What is it used for: Business loans are used to help get a business venture off the ground. They can be used to purchase inventory, office space, equipment, or hire & pay employees.
Advantages: These can be a lifesaver if you have an amazing business idea but lack the funds to get it started. They can also be a smart idea if you already have your own business but are looking to expand or take it to the next level.
Disadvantages: Cannot be used to pay off existing debt or purchase real estate.
Key takeaways: Make sure you ask yourself detailed questions before applying (why do I need this loan, how long will it take me to pay it off, how much money do I need). Once you’re confident in your answers you’ll know if a business loan is a smart move for you!
What is it used for: Purchasing a new vehicle. Usually, auto loans are used to purchase a vehicle that will create the ability to pay off the loan. For example, you need a car to drive to work so you can earn money to pay off your loan.
● Future savings - Taking out a loan on to buy a nicer car can save you money down the road. Buying a used car usually leads to more maintenance costs.
● Good for credit history - Auto loans are relatively easy to get. Making your payments on time will improve your credit score over time.
● Opens up new possibilities - A new car will allow you to drive many places that you wouldn’t be able to walk to.
● Creates another monthly payment - Although you may save money in the long run from maintenance costs, financing a car with an auto loan will mean that you have a monthly responsibility to repay it.
● Paying interest - You’ll also wind up paying more than the price of the car when you account for interest on the loan.
Key takeaways: Applying for an auto loan can make sense sometimes. However, unless you’ve thoroughly researched your situation it might be easier to just find a cheap used car.
Home loan (or mortgage)
What is it used for: To finance the purchase of a home.
Advantages: Most people do not have the capital required to purchase a home in cash (which is usually several hundred thousand dollars). To finance this purchase they apply for a home loan.
● Long-term commitment - Most home loans will keep you locked in for either 15 or 30 years.
● The fluctuating cost of the property - Since home prices are always fluctuating, you might apply for a loan when your home is very highly valued and end up paying significantly more over time.
Key takeaways: For many Americans, a home loan is a necessity rather than an a decision. Due to this reason, you want to make sure that you are still making the best possible decision when it comes to getting a home loan (Click Here to chat with one of our representatives today).
What is it used for: Borrowed money used to finance higher education.
● Allows you to receive an education - This will most likely lead to increased potential earnings over your lifetime.
● Experience - A college education is a unique experience that can be made possible through a student loan.
● Leaving school with debt - The average student loan debt in the United States is $31,172.
● Interest - You’ll pay much more than the cost of attendance in interest over the course of your loan.
Key takeaways: Student loans can open up a wide array of possibilities for people. They give you access to unique experiences and will elevate you above your peers when it comes to applying for jobs.
Debt consolidation loans
What is it used for: A type of loan that allows you to replace other debts. Of all the options on this, debt consolidation loans are the most strategic.
● Lower interest rates - Often times, debt consolidation loans can lower the interest rate that you pay on your debt. This can save you lots of money in the long run.
● Single monthly payments - Instead of juggling multiple different loan responsibilities you can focus on repaying one.
● Raising your credit score - Consistently making your payments will lead to an increase in your credit score.
● Difficulty - Due to their popularity and effectiveness, they are often hard to get approved for.
Key takeaways: A debt consolidation is usually a solid strategy if you find yourself loaded with debt. It replaces all your previous debt with a single payment that you can focus on paying down. Depending on your situation, there are lots of different ways that you can use a loan to your advantage. If you have a good idea of which loan you need and why feel free to reach out to us with more questions! We can be reached through our website or by sending us an email.
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