Do You Really Need A $25,000 Personal Loan?

by Mack Bartlett

According to Lending Tree, a personal loan can be used for anything from debt consolidation, a wedding, a vacation, or other personal uses. There is technically no restriction on what  exactly a personal loan can be used for, but sometimes people opt for a home equity loan, or an auto loan, for certain other expenses.

There are some risks to personal loans, however. While it’s great to think about being able to buy virtually anything with a $25,000 personal loan – from a boat to a vacation to dirtbikes – its important to know that they often carry much higher interest rates than other loans. We calculated a 60-month, $25,000 personal loan in New York at over 10%. As of April 2011, a 30k Home Equity Loan at Bankrate was a little over 7%; auto loans are typically 2-5% depending on your credit and the make/model of the car. The reason for this is that personal loans are not secured by assets like a home, automobile, or other collateral. In order to cover the risk they take by lending money, the bank needs to charge a higher interest rate.

Other Alternatives To A $25,000 Loan

Consider a credit card and home equity line! According to the Federal Reserve, you CAN use a home equity line of credit for expenses such as education, medical bills, and other things. Most people use their home equity line for home remodeling and repairs, too.

Credit cards can be a good way to avoid a high interest rate on a 25000 personal loan, too. Depending on your credit score range, your credit cards may have a lower APR than what you would be approved for on the personal loan. But if you have a low Fico score, you may want to check out your options with Lending Tree bad credit. They’re not just a perfect credit mortgage provider.

Always stop and think before you go applying for a loan of any kind – chances are there are other creative solutions that you can take so that you can avoid a higher interest rate and another monthly payment to make.

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