Most categories of consumer debt are on the rise, including credit cards, auto loans and mortgages. None of those, however, are increasing nearly as fast as personal loans. Although Florida consumers take out personal loans for a wide variety of reasons, many are using them as tools for debt relief.
Unlike other loans that are made with a specific intent — such as student loans for college tuition or auto loans for purchasing vehicles — personal loans can be used for virtually anything. The two most common uses include making a one-time large purchase and consolidating debt. The latter is a useful approach for consumers who have significant amounts of credit card debt with varying interest rates, payment dates and balances. With a personal loan, consumers can use the funds to pay off the balances and then make one monthly repayment toward the loan, usually at a much lower interest rate.
Personal loan debt reached $273 million in 2018’s second quarter. That is 11 percent higher than during the same period in 2017, and it is not all for debt consolidation. Consumers who need quick access to large sums of money often turn to these loans.
Personal loans can be especially useful for consolidating debt, lowering interest rates and simply making it easier and more straightforward to make payments. However, it is still debt, and consolidation does not necessarily help when people in Florida are struggling to simply make ends meet. When other forms of debt relief fail, bankruptcy relief through either Chapter 7 or Chapter 13 can provide a proven and effective path towards better financial security.