There are pros and cons to getting a personal loan.

Right now, for millions of Americans, times are tough. It’s understandable if you can’t pay the bills with the country in a recession and COVID-19 still a serious threat. But you’ll need to explore solutions to help you get through.

One option is to secure a personal loan. While this approach can work, it’s not necessarily the right option for everyone. Here’s what to consider to help decide if it’s the best approach for you.

Can you qualify for a personal loan?

If you’re thinking about borrowing to cover the bills, the first big question is whether you can qualify.

Lenders typically check your credit score and sources of income when deciding whether you can borrow, how much you can borrow, and what rate you’re charged to borrow. If you’re struggling to make ends meet because of a lack of income, you may not be approved for a loan.

The Ascent's picks of the best personal loans

The Ascent’s picks of the best personal loans

Looking for a personal loan but don’t know where to start? The Ascent’s picks of the best personal loans help you demystify the offers out there so you can pick the best one for your needs.

See the picks

While there are options, such as secured loans backed by collateral or getting a cosigner, these won’t be available to everyone. So before you count on an influx of cash from a personal loan lender, shop around to see if you qualify and to compare rates and terms.

What are your alternatives?

A personal loan can be an affordable way to borrow, and if you take out a fixed-rate loan, it provides predictability. You’ll know when your payments are due, how much they will be, the total cost of borrowing, and how long it will take to become debt-free.

But there are other options. If you can afford to pay for necessities without a personal loan, that’s the best alternative, because you won’t make all your purchases more expensive by borrowing — with interest — to cover them. Cutting your budget and looking into side hustles that you can safely do during the coronavirus pandemic might make that possible.

Borrowing from friends or family members may also be a better option, since you don’t have to get approval from a lender. But that’s not possible for everyone, and some people don’t want to ask loved ones for a loan.

A 0% APR credit card can be a good alternative if you can repay your balance before the introductory promotional 0% rate expires. You won’t have to pay added interest costs with this approach.

You may also be able to borrow at a lower rate by securing a home equity loan or doing a cash-out refinance, especially since mortgage rates are near record lows. But there are serious risks to that approach, as you could lose your home if you’re not able to pay back the loan as promised.

If you need to borrow, don’t want to worry about the possibility of high interest rates when a 0% credit card rate expires, and aren’t willing to jeopardize your home, then a personal loan is often your best option.

The Ascent’s picks for the best debt consolidation loans

Want to pay off debt faster? Check out our shortlist of the best personal loans for debt consolidation and cut your monthly payment with a lower rate.

Pay off debt faster

Have you considered the pros and cons?

Before taking out a personal loan to pay the bills, consider the pros and cons. Some of the advantages include the following:

  • Personal loans are often unsecured, which means you aren’t putting any collateral at risk.
  • Personal loans often have a lower interest rate than credit cards (unless you can qualify for a 0% APR card and pay off your balance before interest starts accruing).
  • Personal loans provide predictability because you’ll know the cost of borrowing up front, as well as when you’ll be done paying back your loan.

On the other hand, here are the downsides:

  • You’ll need to know up front how much to borrow, unlike with a credit card, which lets you charge purchases as needed.
  • You need proof of income and reasonably good credit to get approved for a loan at a good rate.
  • Borrowing means paying interest, which makes your purchases more expensive.

If you’ve weighed the advantages and disadvantages, explored your other options, and decided a personal loan is the right way to pay the bills, borrow as little as possible to keep repayment costs down. And avoid borrowing if you can’t afford the monthly payments, since late payments could damage your credit score.

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