29% of Consumers Are Delaying Big Purchases. Should You Do the Same or Take Out a Personal Loan?

These days, many consumers are buckling under the weight of inflation. For some, inflation has resulted in depleted savings account balances. For others, it's resulted in altered spending habits.

Not only are many consumers cutting back on spending due to inflation and economic concerns, but in a recent Quicken survey, 29% said they're holding off on making big purchases. If you have a large purchase on your radar but can afford to pay for it outright, then you may not need to push yourself to hold off. But if you need to take out a personal loan to finance that purchase, then you may want to reconsider.

Now's not a good time to borrow

The Federal Reserve has been raising interest rates in an effort to slow the pace of inflation. Not only did the central bank raise interest rates seven times in 2022, but it's already raised rates three times in 2023. And all of these rate hikes are driving consumer borrowing costs upward.

To be clear, when we talk about the Fed raising interest rates, it's not directly telling lenders to charge consumers more for things like mortgages and auto loans. Rather, the Fed oversees the federal funds rate, which is what banks charge each other to borrow on a short-term basis. But when that benchmark interest rate rises, lenders tend to raise their borrowing rates, too, which hurts consumers.

Getting back to personal loans, right now, they're more expensive than they've been in a long time. So if you can hold off on taking one out, that's a good thing. 

Normally, personal loans are hailed as an affordable way to borrow. And they can be particularly cost-effective for borrowers with great credit scores. 

But currently, even a higher credit score may not result in a personal loan rate you're happy with. So rather than spend an excessive amount of money on interest, you may want to consider delaying whatever large purchase you have on your radar.

A side hustle could come to your rescue

Maybe you really want to upgrade your furniture, buy some new electronics, or put in an outdoor playset for your kids. These are purchases that can be expensive, and you may not want to wait for personal loan rates to come down to make them. 

But before you take out a personal loan, look at getting a side hustle. Some of these gigs can be quite lucrative, and if you're willing to push yourself, you might manage to earn enough money to cover the purchase you have in mind without having to borrow money at all. 

Let's say, for example, that you're looking to borrow $2,000 for a new dining room set. If you can side hustle your way to $500 a month of extra income after accounting for taxes, suddenly, your purchase is nice and covered. And that way, you won't have to sign yourself up for a higher interest rate on a loan.