There are a number of good reasons to take out a personal loan. You may need money to continue your education, or to start a business, or for ongoing capital to expand your business. Home improvements are another common reason for borrowing money.
Even “fun” things like vacations, a new motorcycle, or just about anything else are acceptable reasons for taking out a loan if you have good enough credit to get a good rate and you are able to pay the loan back in a timely manner.
There was a time when young adults were encouraged to take out a personal loan, often with a parent as co-signer, shortly after graduation. Many times, the purpose of such loans was more for the sake of establishing a positive credit record than anything else.
We don’t hear of that practice much anymore, but perhaps we should. What better way for a young person to learn about handling credit appropriately than under the tutelage of experienced adults with solid credit who know what they’re doing? It sure beats learning the hard way that high interest credit cards and payday cash advances are not the way to build good credit.
The bottom line concerning whether or not you should take out a personal loan for something has much less to do with whether or not the item is something you need than it does with how and when you propose to pay the loan back. Most of the things you would borrow money for, other than a car, are not truly needs. Frankly, it’s hard to consider much of anything that you’ve gotten along without up until now a legitimate need.
The amount of personal loan you qualify for depends on a number of factors, including your income, personal assets, and credit worthiness. A calculator is available here that will give you a general idea of how large of a personal loan you are likely to qualify for.
Keep in mind, however, that just because you qualify for a large loan doesn’t mean it’s a good idea to actually borrow that much. You can build a positive credit history just as readily by taking a small loan as long as you make regular, consistent, on time payments.
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