3 Reasons Why Personal Loans Are a Good Borrowing Option Right Now

Is a personal loan right for you?

It's not unusual to encounter a scenario where you need to borrow money. Maybe your aging car is on its way out and you need to cover the cost of repairs. Or maybe your air conditioner just broke, or you have another large purchase you really can't put off.

There are different borrowing options you can look at when you need money, from tapping your home equity to running up a tab on your credit cards. But here's why a personal loan may be your best option right now.

1. You get lots of flexibility

When you take out a mortgage, you have to use your loan proceeds to buy a home. Personal loans work differently. Because they're not secured by a specific asset, you're not limited to using them to purchase a specific asset. Rather, you can take out a personal loan and use your proceeds for any purpose you please, whether it's to make a home repair or take a vacation.

Of course, that same flexibility could get you into trouble. It's generally not a wise idea to borrow money to pay for a trip, or anything else that's not a necessity. But right now, a lot of people are struggling to cover their basic living costs due to inflation. If you take out a personal loan, you can use that money to put food on the table, pay for gas, or cover your utility bills.

2. They tend to close quickly

When you take out a mortgage, it can take months for your loan to become finalized. But when you apply for a personal loan, you'll often get your money within days. And so if you need cash in a pinch, it's smart to look at a personal loan.

3. They come with fixed interest rates

Some borrowing products, like credit cards and HELOCs (home equity lines of credit) come with variable interest rates. That means the amount of interest you start out paying on your debt could change over time.

With a personal loan, you get to lock in a fixed interest rate and pay off your debt in equal installments. You'll have predictable monthly payments to look forward to, and right now, that's especially important.

The Federal Reserve has been raising interest rates in an effort to slow the pace of inflation. And it won't be surprising to see more rate hikes this year. That could make credit card borrowing and HELOCs more expensive. But if you lock in a personal loan now, the rate you start out with will be the same rate you're subject to throughout your loan's repayment period.

No matter why you have a need to borrow money, it pays to look at a personal loan as a viable option -- especially if you have great credit. But even if your credit score needs work, you might still manage to qualify for a personal loan, albeit at a higher interest rate. If your credit score is high, you may find that a personal loan is your most affordable borrowing option right now.