When it comes to loans, there are a lot of things that we need to be aware of. For one thing, there are tons of different types of them out there. Today, we’ll primarily be focusing on small, personal loans, but it doesn’t hurt to learn about all of them. It’s certainly not a secret that there are a ton of different reasons to take out a loan as well.
Overall, though, these credit agreements have a somewhat negative connotation. This means that many folks aren’t exactly keen on utilizing loans unless they absolutely have to. Of course, there are plenty of good reasons to decide to borrow money from a financial institution, and that’s what we’re here to discuss today. If you want to learn about the top ten reasons to get a small loan in 2024, you’ve come to the right place!
One: Emergencies
While we wish we could say that all of the reasons to borrow money are sunshine and rainbows, this simply isn’t the case. For that reason, we’re starting off with one of the “grimmer” motivations behind taking out a loan. Of course, it’s not always a bad thing necessarily, but when financial emergencies happen, it’s understandable to consider borrowing as an option.
If you look at this website, you can see some examples of this in action. Overall, unexpected expenses like car repairs, medical bills, or home maintenance can be covered with a loan. They can provide the necessary funds to address these unexpected costs. Here in Norway, you can usually get a reimbursement for medical bills too, so that could be extra incentive to take this route!
Two: Major Purchases
Moving on to something a bit more cheerful, let’s take a look at making large purchases. This could range from furniture, a new car, or even a home. Obviously, small loans probably won’t cover some of the really big purchases, but for new appliances or furniture, it could easily give you the boost needed to get your dream home.
Three: Business Expansion
Another potential that tends to be overlooked is making expansions within or for a business. You see, for entrepreneurs, a loan can provide the necessary capital to expand their business, hire new staff, or invest in new equipment and technology. Just keep in mind there may be some different processes for obtaining business loans as opposed to personal ones.
Four: Debt Consolidation
If you have multiple debts with high interest rates, a small credit agreement can help consolidate these debts into a single, lower-interest loan. This can simplify your payments and reduce the overall cost of debt, which is quite helpful. Of course, this option won’t be perfect for everyone, but it’s certainly something to consider if you’re struggling with several larger debts!
Five: Home Renovations and Improvements
While we may not think of it this way all of the time, it’s hard to deny the fact that homes are an investment. Even if we aren’t planning on selling the property in the future, it’s still wise to keep things up-to-date and stylish. After all, that can make it much more pleasant to live in a home anyway!
However, if you’re struggling to come up with the cash to do so, a loan could be the answer. As we mentioned, it can be looked at as an investment of sorts. There are resources like this one: https://pure.coventry.ac.uk/ws/portalfiles/portal/3972418/boscomb.pdf, that demonstrate this use.
Six: Education and Training
Depending on where you live, this one could be more relevant or fairly unimportant. Still, we’ll briefly explain how it works. Generally speaking, a loan can be used to finance education or training expenses, such as a college degree or certification program.
Seven: Weddings and Special Events
For many of us out there, one of the most special or exciting days of our lives is our wedding. It makes sense, then, that we would want to make it as extravagant and extraordinary as possible. Sometimes coming up with all of the downpayments at once is a challenge though, unfortunately.
This is where small loans can come into play. They can help ensure we can have the wedding or event of our dreams, and we can make gradual repayments on the parts rather than paying a ton of money up front. It’s certainly an option to consider!
Eight: Travel and Vacations
This entry is fairly similar to the prior one, but we feel it deserves a spot on its own due to the inherent differences. A small personal loan can provide the necessary funds for a dream vacation or travel experience. If you’re someone who loves to travel but doesn’t want to pay the entire cost up front on your own, this could be an option.
Nine: Business Start-ups
Often, one of the biggest roadblocks in opening a business is initial cash flow. That’s why some entrepreneurs opt for a small personal loan to get a jump start to their endeavors. While it won’t be the best choice for everyone, it’s one that holds merit in many different situations.
You see, they can be used to finance the start-up costs of a small business, including initial inventory, equipment, and marketing expenses. All of those things can be a whole lot of cash out of pocket, but these credit agreements offer many people a way to pursue their dreams without that extra stress.
Ten: Credit Building
To round out our list, we have a reason that may seem a bit strange at first glance. Something to keep in mind is that throughout our entire adult lives, many financial decisions and options that are available to us will be influenced by our credit scores. Building these scores up is therefore quite critical.
Doing so can be a challenge, though, especially if you don’t want to get a credit card. One option is to get a small loan to build up your credit score. Simply make repayments on time and enjoy the benefits of that on your score!
