I have been doing a lot of loan research lately, both for my recent peer to peer loans post that I wrote last week, as well as for a new mortgage that my wife and I are entering into to buy a new house. So this is an ideal time to continue with the theme of loans, and to take a closer look at personal loans and where they can fit in terms of helping you finance certain projects.


Uses for a Personal Loan

Personal loans are a great way to get money whenever you have a need to spend more than a few thousands dollars. A few of the more common ways to make use of a personal loan are:


I think that personal loans are a great way to kick off an investment. Whether you are starting or expanding a business, or want to pump some money into the stock market. Getting a personal loan can give you the funds you need to get started quickly, without having to wait around to save up the money yourself.

When it comes to the stock market, I know that many people get lured into margin loans. I personally would always choose a personal loan over a margin loan for investing in the stock market. The reason is because a margin loan often has much stricter rules, often has a higher interest rate and can be called at almost anytime, which means you have to sell up and potentially make a loss.


Credit Cards

I would also use a personal loan in place of a credit card whenever the amount I need to borrow exceeds about $2,000. The primary reason is that credit card interest rates are giant in comparison to personal loans, so you will end up paying significantly more in interest repayments in the long run.


Car Loans

I actually don’t like borrowing money for cars unless you absolutely need a car to get to work and make money. Cars are a depreciating asset, meaning that the minute you buy a car from a dealer, it loses value. It will also continue to lose value the more you drive it and the older it gets. This means that you are paying interest for something that is losing value – normally not a good idea.

As I said though, if you can turn that car loan into a productive asset (taking you to work would qualify) then you will be better off for it.

Despite me saying I don’t like car loans – I did actually get a small one for my first car, although the reason was to improve my credit score by showing that I was able to pay back a loan successfully.



Plenty of people like to renovate, and personal loans can be a great way to fund those renovations. Just try to limit the renovations to things that will actually increase the value of your property.



Look I’m just going to say this – I do not condone borrowing money for holidays. If you aren’t able to save up for a holiday and pay for it yourself, then you probably shouldn’t be going on a holiday. Having said that, I do know that lots of people borrow money to go away, so getting a personal loan is certainly a way to finance that if you must borrow money.



Weddings are another massive expense that people often borrow money for. Again, I personally feel that this is a waste of money and that you should really save up before having a wedding. But if you really can’t wait, a personal loan might be the best option for you to finance that one really expensive day.


Banks vs Credit Unions

When it comes to actually getting the loan, most people will immediately think of going to a bank to get the money. I know that I would have prior to starting this personal finance blog. The problem with that mentality is that more often than not, the banks are actually ripping you off big time. They charge seriously inflated interest rates that end up reaping them massive profits. The big problem is that people don’t tend to shop around, or they have a fear of the unknown.

If you are reading this and looking to get a personal loan – be sure to do a comparison of all the major banks AND credit unions like People’s Choice Credit Union. In my experience, the credit unions will offer significantly lower interest rates that the big banks, and they often come with either lower, or no fees. The primary reason credit unions offer such great deals is because they are trying to lure you away from the big banks, who already have most peoples business.

Do yourself a favor and start comparing the interest rates and fee schedules of the banks and credit unions to see just how much money you could be saving over the life of the loan. If you want more information on a product, call them. I personally have found that credit unions are far more likely to negotiate with you than the big banks will and that can equal even more savings.