24 million Americans are likely to take out a personal loan this year. They follow in the footsteps of hundreds of millions of other people that have taken out loans before them.
All of that borrowing begs one big question… Why do people take out loans in the first place?
There are tons of reasons to ask for money from lenders. To try and bring some sense to the borrowing madness, our team has poured over a number of loan requests and have deduced what the 11 most common reasons for borrowing money are among Americans.
Our hope is that, by sharing this information with you, you’ll get a better idea of how people spend their money and if taking out a loan is sensible for whatever it is that you’re looking to purchase.
1. Debt Consolidation
When people carry debt, they typically carry it from a variety of lenders. They might carry some debt from their credit card provider, they might other bits of debt from an online loan service like Tiempo Loans, etc.
Having all of that debt spread across all of those providers leads to a couple of problems:
For starters, managing multiple accounts is difficult and trying to stay on top of everything might lead to the occasional missed payment. Next, each of those loans have different interest rates, some of which might be quite high.
To simplify things and reduce the amount being paid in interest, savvy borrowers will have a single lender buy out all of their debt. That way they can pay that single lender (who presumably offers a low-interest rate) as opposed to multiple lenders.
2. Medical Bills
Paying off medical debt is among the most common reasons to ask for money because medical bills have spiraled out of control in the United States.
Today, an American citizen can expect to pay upwards of $300.00 per month just for their insurance premiums. If they can’t afford those premiums, they could be on the hook for tens of thousands of dollars if they break a bone or suffer from a similar issue.
Insured or not, rather than paying medical debt out of pocket, the average person will take out a low-interest personal loan and pay their debt down in manageable monthly installments.
3. Home Repairs
Being a homeowner is great!… That is of course until a pipe bursts, a hole opens up in your roof or your water heater explodes.
When adversity strikes your domicile, inevitably, high bills are going to strike your wallet. Some of those bills could easily come in at over $10,000.00.
If that sounds like an impossible amount of money to pay in one go, borrowing money at a good interest rate serves as a reasonable alternative that can give both your house and your bank account a break.
4. Car Maintenance/Fixes
There’s nothing worse than your car breaking down when you’re tight on cash. That’s because you need cash to fix your car but you need your car to go to work to make cash.
Consequently, if you don’t have money reserves, a busted vehicle can put you in a loop of financial problems.
Breaking out of that loop is among the best reasons to ask for money from a lender because if you don’t, you might find yourself out of work and in even worse financial shape.
A related reason to borrow money is for car maintenance. Car maintenance is a lot more affordable than car repairs so taking out a loan to get your oil changed, tires swapped out, etc. can save you from needing to take out a bigger loan later on.
5. Moving Expenses
Millions of people move all around the country every year. Most of them move to chase down work opportunities. Others move because they’re looking for a fresh start in life.
Whatever your reason for moving is, one thing is for sure: Moving is expensive.
Getting people to pack up your stuff, paying for trucks, fuel… The expense list goes on.
Fortunately, personal loans are always standing by for people that need a kick of cash to get them to the places that they’re meant to go in life. By applying for a loan online or at your local bank, you could be on your way in as little as 24 hours.
You might not think that going on vacation is among the best reasons to ask for money from a lender. The truth is though that people take out loans for that purpose every single year.
Going on a vacation at least once every 12-months can vastly improve your productivity per expert articles that outline the harmful effects of burnout. Looking beyond the spectrum of employment, a vacation can also be very helpful to your ability to maintain a healthy and happy family.
After all, there’s no better place to bond and get to know one another better than on a week-long camping trip with the people that you love or during an unforgettable vacation to Disney World.
7. School Costs
You’re starting your semester at school and qualify for financial aid but it won’t be coming in for another month. Before then, you have to put down a deposit for your apartment, register for classes and buy books.
How are you going to bridge that gap? Personal loans!
Millions of people that have higher education aspirations turn to personal loans to make their educational dreams real. When you think about it, the amount of additional earning power that a degree can net you more than pays for the interest that your loan is going to cost you.
Tying the knot can be one of the happiest moments of your life. It can also be one of the most expensive.
On average, a wedding in America will run a couple $33,000.00. Unless you spend years saving, it’ll be extremely hard to dig up that kind of money between the moment that you propose and the moment that you say “I do.”
Whether its to pay for the venue of your dreams, delicious food or that ring that you’ve had your eye on, personal loans are there to not let money come between a couple and their happiness.
9. Pet Emergencies
The vast majority of people reading this article probably have health insurance. This is especially true since the Affordable Care Act’s implementation.
Despite strides made to protect human health rights, animal health isn’t exactly a matter of public policy.
Consequently, when Fido breaks a leg or Carmen gets sick, the average pet owner is going to have to pony up thousands of dollars in veterinary expenses. Believe it or not, those high prices often lead to pet parents putting down their animals prematurely.
You can prevent pet-related debt from forcing you into a bad decision by getting your animal pet insurance or by taking out a loan.
We can’t think of reasons to ask for money more valid than saving a life.
10. Starting a Business
In business, you have to spend money to make money. That popular saying is all well and good but if you don’t have money to spend, how do you start that awesome cycle?
Spoiler alert: You don’t.
Since most entrepreneurs aren’t likely to let a few bucks keep their spirits down, taking out loans is a popular solution to get their operations off of the ground.
11. Holiday Purchases
If only we could enjoy the cheer of the holidays without suffering through all of the financial ruin that buying presents for everybody you know brings about. Unfortunately, in most households, receiving presents and being happy go hand in hand.
Rather than having to drop thousands of dollars in 1-month, personal loans let you spread out the expense over the course of the year.
Wrapping Up Compelling Reasons to Ask for Money
Now that you know some of the compelling reasons to ask for money that your peers leverage, ask yourself, is the reason why you’re looking for a loan so outlandish?
Our guess is probably not.
Don’t ever feel ashamed of borrowing money. People do it every day.
Just make sure that the loan you take out is from a reputable lender and carries interest/fees that are fully disclosed at the time of signing.
After all, signing onto a bad loan can lead to financial ruin.
If you’re hungry for more advice on all things finance, do yourself a favor and dive deeper into the content on our blog!