“You may consider taking out a personal loan for a variety of reasons, including completing a home improvement project, making a major purchase, covering educational expenses, or paying an old bill that is accruing interest. In some cases, it can be quicker to take out a personal loan than a home equity loan, and you may not have enough equity in your home for a home equity loan in the first place.”
I recently called my bank to ask about fees for using my debit card on an upcoming international trip. I laughed when the banker followed up by asking, “Are you interested in taking out a personal loan for spending money on your vacation?”
There are plenty of good reasons to take out a personal loan, but going on vacation isn’t one of them. A personal loan is, in essence, an unsecured loan that you get on the basis of your credit and income — unlike a mortgage loan or home equity line of credit, which uses your home as collateral. Personal loans have advantages and disadvantages compared to secured loans, so whether you go for one of these when you’re in need of cash depends on your individual situation.