Personal loans aren't always bad. If you work with a reputable lender, use the loan for the right reasons, and can commit to paying it back, then a personal loan may be a smart choice. However, a personal loan is often unsecured. Because it is not secured by the property that the lender could garnish if you don't repay the loan, the lender is taking a greater risk and will most likely charge you a higher interest rate than it would on a mortgage or car loan.
How high your rate is may depend on several factors, including your credit score and debt-to-income ratio. Chronically borrowing money is a sign that you are in serious financial trouble. A personal loan can help you in the short term by giving you quick money, but it could leave you with an even bigger problem in the long run, as you'll have to pay back everything you borrowed, plus a large portion of the interest. Lenders disburse personal loans as a lump sum up front that you can use to make a purchase or pay off another debt.
If you are concerned that your loan application will be rejected, try to research a lender's requirements before submitting your application. Not only does this reduce the number of payments you have to remember each month, but it can also result in a lower overall interest rate if your credit score has improved since you got your other loans. Fees, which cover the processing of the loan, can be accrued on the loan or subtracted from the amount disbursed to the borrower. This means you won't have to risk losing a valuable asset, such as your house or car, if you don't repay the loan.
LendingPoint also doesn't offer the option of sending loan funds directly to creditors, which many other lenders do offer. For example, if you're borrowing a loan to pay for a vacation or wedding, you might regret incurring that debt. While this may be a good strategy for necessary purchases, it can be dangerous if you rely on loans to go on vacation or cover other discretionary expenses. So when you ask yourself, “Are personal loans a bad thing? remember that it can be a win-win option for people who use it as intended.
Whether you're going to college, getting married, or buying a car or a house, different types of loans are tailored to different borrowers. Getting a joint personal loan by adding a co-borrower to your application can make it easier to qualify. If you are considering applying for a personal loan, request quotes from several lenders to compare interest rates and loan terms. On the other hand, if the loan you are considering has a three-digit interest rate and you have limited or unstable means of repaying it, then a personal loan will do you more harm than good.
If you're considering one, Investopedia's personal loan calculator can help you figure out how much it would cost you.