Making Smart Money Decisions When You Need Them the Most
Ideally, we’d all have enough money set aside to handle every unexpected expense that comes our way. The car needs a major repair? No problem. The furnace quits? We’ve got it covered. A medical bill shows up that insurance didn’t completely take care of? Just write the check.
Real life doesn’t work that way.
Sometimes an expense is too important to ignore, but too large to comfortably pay for all at once. Other times, the money may be available in savings, but using all of it would leave you without much of a financial cushion.
That’s where an unsecured personal loan may be worth considering.
First, What Is an Unsecured Loan?
Unlike an auto loan or home equity loan, an unsecured loan doesn’t require you to pledge your car, home or other property as collateral. You borrow a specific amount of money and repay it over an agreed-upon period of time, typically with regular monthly payments.
It’s not free money, of course. You’ll pay interest. But far less interest than you might with a credit card. It’s money financial institutions lend to you because it’s the right thing to do, usually helping you out of a jam, when you need it the most. It’s people helping people, which is why it’s a great product offered by your Ashland Community Federal Credit Union.
What Might You Use One For?
There isn’t one “right” reason. If you need the money for something urgent, and can’t or would rather not slap the balance on a credit card, an unsecured loan is worth a look for:
Unexpected home repairs. A leaking roof, broken appliance, plumbing problem or furnace repair can’t wait until you’ve saved enough cash.
Vehicle repairs. If you rely on your vehicle to get to work, a $1,500 repair can quickly become more than an inconvenience. Missing work can make a bad problem worse.
Medical or dental expenses. Deductibles, dental work, glasses and other out-of-pocket healthcare expenses can sometimes arrive faster than the money shows up.
A major life event. Moving expenses, travel for an important family situation or other one-time costs can sometimes be easier to manage when they’re spread over a reasonable repayment period.
Combining existing debt. An unsecured loan may also be used to consolidate several debts into one monthly payment. Multiple high interest credit cards paid off with a lower interest unsecured loan can save a ton of money, and keep your debt problem from spiraling out of control.
What If Your Credit Score Isn’t Great?
At the Ashland Community Federal Credit Union, we don’t make decisions based solely on credit scores. We’re more flexible than that. But some banks do, and so it warrants the conversation.
A lower credit score can affect whether you qualify for a loan and the interest rate you may receive. But the high interest “payday” loans are not a good solution for most people. In fact, some high-interest loans make the credit score problem worse, sending your financial situation spiraling out of control.
The key is to try. Don't automatically turn to expensive short-term borrowing simply because you think your credit score closes the door on other choices. At your Ashland Community Federal Credit Union, we like to say we are going to “give you a loan, unless you can talk us out of it”. That’s our way of saying that we’re on your side, when times are on the tough side.
And by the way, if rebuilding your credit is one of your goals, successfully managing future credit can be part of establishing a stronger credit history over time. So there’s plenty of reasons an unsecured loan is worth a try if your credit is less than perfect.
Borrowing Can Be a Tool — When You Have a Plan
There’s an important difference between borrowing because you want something today and borrowing strategically because you need to solve a problem.
Before taking out an unsecured loan, ask yourself a few questions: How much do I really need? What will the monthly payment be? Can that payment comfortably fit into my budget? What is the total cost of borrowing? And is there another reasonable way to handle the expense? If those questions point toward an unsecured loan, talking with someone you trust can help.
The thing about unsecured loans is that many people just don’t know they exist. For life’s ups and downs, they look to savings or credit cards first, not realizing there are other options. If those questions point toward an unsecured loan, talking with someone you trust can help.
The key? Talk to someone. At your Ashland Community Federal Credit Union, we’d rather have a conversation with you than simply tell you to “apply now.” Tell us what you’re trying to accomplish, and we can help you understand the options available to you.
Because when you need money, it pays to have someone on your side with your best interests in mind. Let’s solve the issue, but let’s solve it the right way.
