34% of Americans take out loans on an annual basis. That means, over the course of two years, you’re likely to make a loan request.
Before you run to the bank or an online lender to try and put money in your pocket, you might ask yourself, “What can I do with my loan?”.
The answer to that question depends on a few factors. Below, we share common things that people purchase with their loan money and outline the kind of loan that’s traditionally used to make that purchase.
Our hope is that by the end of this post, you’ll have more clarity regarding the flexibility of loan money.
- Purchase a Home
Millions of people purchase homes ever year. The majority of them will use a loan to help bridge the gap between what they have in their pockets and how much their home’s purchase price is.
Traditionally, home buyers apply for fixed-rate or variable-rate mortgages in order to buy a house. These loans might be underwritten by the FHA or the VA depending on your personal qualifiers.
- Get a Car
There are over 250 million vehicles on America’s roads. Most of the newer vehicles that you see are being financed by a bank. Consequently, auto loans are a big revenue driver for lenders.
Auto loans are given exclusively for the purposes of purchasing a car. Interest rates on these loans vary based on whether you’re buying a new or a used vehicle as well as other more common factors (credit, income, etc.).
- Get an Education
If there’s one investment that you can make that has an outstanding chance of paying off, it’s an investment in your education. Pursuant to that fact, millions invest in going to college every year and use student loans to help pay their tuition and fees.
Student loans can be facilitated by the government and through the private sector. This type of loan is not dischargeable and should be used exclusively for student expenses.
- Refinance Your Debt
One of the most popular uses for loans is paying off other loans. you might be asking, “Why would I use my loan money to pay for another loan?” While this process may seem counterintuitive, the advantage of refinancing is to dodge interest in fees.
For example, if you paid off a high-interest loan with a low-interest loan, you’d save money each month working with your new lender.
- Anything Else
If you’re looking for ultra-flexible, free cash loans, we’re happy to report that you have options! Personal loans can be given out to the tune of thousands of dollars and most lenders don’t care what you do with the money so long as you pay them back.
Wrapping Up Our “What Can I Do With My Loan” Question
A lot of first-time borrowers find themselves asking, “What can I do with my loan?” Now that you know that the type of loan you get can affect money’s flexibility, you should have a better idea of what to look for based on your spending needs.
Life is filled with financial questions. Our blog is filled with answers.
For additional financial advice, read more of our content today!
