Personal loans are quickly becoming more popular in the wake of the Credit CARD Act of 2009. This act, implemented on February 22, was the most sweeping change within the industry in decades. Under the new regulations, low-income families and people with a bad credit history will find it nearly impossible to obtain a line of credit. In addition, the Federal Family Education Loan Program (FFELP) is on shaky ground, as politicians call for a shutdown of the program. If this program is terminated, it will be very difficult for students without a college fund to be able to afford tuition. Both of these shake-ups are making the personal loan a highly desirable option for people of all socioeconomic backgrounds.
Personal Loans vs. Credit Cards
A personal loan can be used just as you would use a credit card. For example, you can use a personal loan to fund a vacation you’ve always dreamed of taking. You can use it to cover unexpected expenses, such as medical expenses or an expensive home repair, such as a new boiler or new air conditioning system. The advantage of the personal loan is that it offers a flexible line of credit that can be applied to the same kinds of purchases you make with a credit card, without all the ridiculous penalties, fees, and the huge interest rate. It’s also much better than the popular alternative to credit cards, the infamous payday loan–which has such a high rate of interest that a single loan can put your financial outlook in jeopardy.
Personal Loans vs. Student Loans
As student loan lenders tighten their belts and the FFELP is in danger of shutting down, personal loans can be used to take up the slack when paying for college expenses. They can be obtained in a small amount, suitable for paying for books for one semester, or they can be made in larger amounts to defray tuition costs. As more student loan lending becomes privatized, opting for a personal loan is one of the many ways a student can take charge of his financial destiny. It’s also one of the few ways that a student who could not otherwise afford college can make it happen. Parents can also take out these loans to finance their sons’ and daughters’ educations.
As other tried-and-true forms of lending are on the wane, savvy consumers can take up the slack in their wallets by pursuing personal loans. If you are unsure if an unsecured line of credit can be used in your situation, be sure to contact your loan officer to see what your options may be.