When Should You Consider Taking a Personal Loan?

Here are some common reasons why folks take out personal loans:

  • Cover the expense of a home renovation or repair.

  • Pay for a large event like a wedding or fundraiser.

  • Make a big purchase like a car, motorcycle, or even an exotic pet.

  • Consolidate credit card debt.

  • Unexpected expenses such as medical emergencies.

  • World travel or vacations.


Whether you should or shouldn’t take out a personal loan depends on two factors:

  1. How much interest you’re willing to accept.

  2. Your ability to pay back your loan.

While it’s generally recommended that you only take on debt for essentials like medical emergencies or home repairs, it’s still OK to take out a small personal loan for things that contribute to your happiness and mental health, like a vacation or a new motorcycle, as long as you’re ok with the interest.