5 reasons to get a personal loan

They're called personal loans because your reason for getting one is, well, personal.

Personal loans can put cash in your hands that you can use for just about anything.  The most common uses include debt consolidation, home projects, medical bills, emergencies, and big life events.

We'll break down the pros and cons to help you decide whether a personal loan is the right move.

What can you use a personal loan for?

You can use a personal loan for almost any legitimate personal expense, but you need to know that purpose ahead of time. Lenders typically ask what you plan to do with the money when you get a rate quote or when you apply. And the answer could be important.

Lenders ask for your uses for a few reasons. One, because your intended use might influence your rate or term with some lenders. Also, most lenders restrict you from using the funds for certain things, such as funding a business, for college tuition, or for anything illegal.

So what should you write as your purpose? Give the honest, specific category that fits your plan. Commonly approved purposes include:

• Debt consolidation

• Home improvement or repairs

• Medical expenses

• Emergency costs

• Major life events, such as a move

If a lender doesn't allow a certain use, they'll let you know before you move forward.

Top reasons to get a personal loan

One great thing about personal loans is that they're flexible. You can get a loan to fit your needs, whatever they might be.

So why do people get personal loans? Here are some of the most common reasons.

1. Debt consolidation or paying off credit card debt

The effort to pay off credit card debt can feel like an uphill battle when your card charges a steep annual percentage rate (APR). Even if you're committed to paying more than the minimum due each month, you might not feel like you're making much progress if a big chunk of your payment goes to interest.

That's where a personal loan could save you money, time, and stress.

You could use a personal loan to pay off those pesky credit cards (or other debts). You might reduce the overall cost of your debt by getting an interest rate lower than what you're currently paying. Personal loans often have lower interest rates than credit cards, so the difference could be noticeable.

If you can consolidate your debt at a lower rate, you could reduce the cost of your debt and perhaps even pay it off faster. The math doesn't always work out to savings—especially if there's an origination fee to consider—so crunch the numbers before you sign.

2. Home improvements and repairs

Another popular use for a personal loan is making improvements or repairs around the house. You don't have to borrow against your home with a home equity loan or home equity line of credit (although that's a great option to research if you haven't yet).

Maybe you've been dreaming of a kitchen upgrade. Or you can't put off that roof replacement any longer. A personal loan means you can stop putting home improvements and repairs on the back burner.

3. Pay for medical bills

Got medical debt? You're not alone. A large number of people in the U.S. carry medical bills they can't pay right away. While some providers offer ways to avoid or finance medical debt, you may need outside financing in some cases.

A personal loan could be a way to fund a procedure not covered by insurance or that doesn't qualify for a provider payment plan.

4. Emergency or unexpected life events

Life happens, right? And when it does, a personal loan could make it easier to manage financial curveballs.

Here are a few scenarios where you might use a personal loan to cover expenses in an emergency:

• Your hyperactive puppy swallows their favorite squeaky toy, and the vet has to operate to get it out.

• Your teenage son, who recently got his license, gets into a fender bender, and you need cash to pay your auto insurance deductible.

• A storm sends a tree crashing through your roof, and you need $2,500 to cover the deductible before your homeowners insurance company pays for repairs.

Bottom line, a personal loan could be your financial umbrella when rainy days roll in.

5. Moving expenses

Between setting up a new home and getting all your current stuff there, moving costs add up fast. A perfect new job or better cost or quality of life could all be great reasons to make a big move despite the expense. And a personal loan could be a good way to cover the costs of that move, letting you spread them out over a few years to ease the immediate financial burden.

Reasons not to take a personal loan

Generally, you could use a personal loan to pay for almost anything. But is there anything you shouldn't use a personal loan for?

It's mostly up to you what you do with a personal loan. But most lenders have at least a few restrictions. Plus, many financial experts will tell you that you shouldn't use personal loans for certain types of purchases. Think twice before using a personal loan for:

• Investments. Borrowed money is risky to invest because you still have to repay the loan even if the investment doesn't pan out. Most lenders also specifically prohibit using your loan funds to invest in things like stocks or crypto.

• College. Personal loans aren't usually the best option for college since federal student loans are typically the lowest-cost way to borrow. And many personal loan lenders don't allow you to use loan funds for higher education anyway.

• Wants. Taking on debt of any kind, including a personal loan, for things you want but that are beyond your means is a good way to end up in a debt trap. Even better, research studies show that saving up in advance for a luxury purchase like a vacation results in greater happiness and satisfaction in the experience.

What lenders may not let you use a personal loan for

Whatever use you give the lender when you apply is what you need to use the majority of the money to do. Additionally, most lenders set limits on what you can use the proceeds from your personal loan to fund.

These restricted uses vary by lender, but they often include:

• College or post-secondary tuition

• Business start-up or operating costs

• Home down payments

• Investments or gambling

Ask about any limits when you get your rate quote so you know what's allowed.

Pros and cons of a personal loan

Here are some of the top personal loan pros:

• Personal loans are usually fixed-rate loans, so you'll know your total cost of borrowing upfront.

• Fixed rates usually mean fixed payments, which makes it easier to plan your budget around repaying a personal loan.

• You might be able to borrow more money with a personal loan than a credit card and get a lower APR.

• Approval and funding can be fast. Achieve Personal Loans could fund as soon as the next business day after you're approved.

• Personal loans are usually unsecured, meaning you don't need to pledge anything of value to get the loan.

Here are some personal loan cons:

• Your rate depends on your credit profile, income, and other factors.

• Most personal loan lenders charge an origination fee or other fees, which adds to your cost of borrowing.

• Lenders may limit how you can use personal loan funds.

Achieve Personal Loans could be a good place to start. Talk to a professional loan consultant about the specifics of your situation.