Personal loans are some of the most popular sources of funds for home improvement in the Beehive State. They do not require any collateral, so you do not have to borrow against any asset you own when you take out one.
However, the lack of security makes a personal loan a bit more expensive due to potentially high interest. Also, this type of credit can involve many fees that can either inflate your overall expenditure or limit your financial freedom to pay your debt down.
Nevertheless, any experienced general contractor in Utah will attest that a personal loan is an excellent home improvement financing option despite its imperfections. Below are the signs you should consider it over other financial products.
You Do Not Need to Borrow a Lot of Money
The cash you can access through a personal loan might be limited, but it is usually big enough to help fund a low-end project like a roof replacement. This type of financing is meant to supplement your savings, so it is a good choice if you have a couple of thousands of dollars lying around.
You Can’t Qualify for a Balance Transfer Credit Card
One of the best ways to pay for home improvement is using a credit card with 0% APR. If you qualify for a balance transfer, you can take advantage of the introductory rate of your new card to repay what you owe without dealing with any interest.
Of course, this option is only possible if you have good credit. Otherwise, your credit card issuer might not allow you to do a balance transfer outright or keep your credit limit small.
You Are a Member of a Credit Union
Credit unions are not the only financial institutions that offer personal loans, but they are better than banks on many levels. They offer more competitive rates and fees, for they are in the business of making their members richer.
If you have bad or fair credit, a credit union is one of the few lenders that might be willing to loan you thousands of dollars without collateral and outrageous interest.
But then again, your credit union consider many things other than borrower membership when approving a personal loan application. Expect other aspects of your financial standing, such as employment history and income, to be scrutinized too.
You Refuse to Touch Your Home Equity
Borrowing against your property after building equity on it for years is better than a personal loan in many ways. A high-value house can be a goldmine, and home equity loans can come with low interest.
However, converting a portion of your current home equity is not without significant risks. If the housing market turns sour, you might have an underwater mortgage. In other words, you would owe more on your property than what it is worth, which could restrict the incentive of selling it.
Again, a personal loan does not involve any collateral whatsoever. Its lender expects your word to be your bond, which is why you can obtain a sizable amount of cash with just your signature as long as you meet the standard requirements.
It is hard to tell when the advantages of a personal loan outnumber the disadvantages without paying attention to your financial situation. It is imperative to explore as many financing options as possible before deciding to apply for one.