There have been two major trends reported in the personal loans industry this past week, and these have major consequences for anyone opting for a personal line of credit. First, financial analysts are reporting a decrease in the number of borrowers seeking personal loans for debt consolidation. This means more borrowers are choosing to pay off debts, saving a personal loan for a single large purchase. Secondly, financial analysts are reporting that personal loans remain quite difficult to obtain from financial institutions and interest rates are on the rise. This means that more people may choose non-traditional methods of obtaining a personal loan.
If you are in need of a personal line of credit, these new trends may give you pause. You may wonder, is it even OK to try for a personal loan at this point? Should you wait or find alternative means to fund your personal expenses? No matter how difficult personal loans may be to obtain, there will always be situations that arise that call for more funding than you have. Use this step by step guide to see if you should apply for a personal loan to cover your unexpected expense:
Ask Yourself These Questions First
Before considering a personal loan, you should determine if your situation is indeed an emergency and you have exhausted other avenues of funding. Ask yourself these questions to determine a real emergency:
• Is it a sudden, unplanned expenditure? • Did you give yourself 24 hours to think it over? • Can you afford to pay for this expense right now, in cash?
• Is this a necessity or a luxury?
Some emergencies are straightforward, such as a sudden medical expense or a car repair for the vehicle that gets you to and from work. Buying a new couch just because it’s on sale is not really an emergency, but it is an unplanned expense. Asking these questions can help you decide if it’s the right thing to do at the moment.
Find Alternative Ways to Pay
If taking out a personal line of credit won’t work at this point, then you can find alternative ways to pay for these expenses. For example, you can save up money prior to starting home renovations. You can also look at layaway for major home purchases; several major retailers are bringing this kind of personal line of credit back during the recession. Personal loans are a good option in many situations, but they aren’t the only option–think outside the box and you may be surprised at how well you can handle a crisis without a personal loan