From renovating your house to paying down higher-interest debt, Brittney Castro, CFP, shares three ways a personal loan can be used as a tool to reach your goals.

Video Transcript

BRITTNEY CASTRO: Hi, I'm Brittney Castro, a certified financial planner. And I'm here to tell you about three ways you can leverage a personal loan to help reach your financial goals. What is a personal loan? A personal loan is borrowed money received as a lump sum that you can use for almost anything. The flexible repayment terms and set regular monthly payments. Make it a great option to consider as part of a financial plan for a few common scenarios.

One of the most common reasons people take out a personal loan is debt consolidation. Did personal loan applicants may qualify for a lower interest rate on a loan than a standard credit card? You can utilize a personal loan to consolidate your higher rate loans and credit card balances into one monthly payment, which can save you hundreds or even thousands of in interest.

A Discover personal loan can be a great tool to pay for big life milestones with a fixed rate and set repayment term it makes budgeting predictable. And you could shave years off your repayment compared to the time to pay off a revolving credit card when making minimum monthly payments. Let's say you want to buy a bigger house, but are deterred by rising housing costs and mortgage rates. Consider taking out a personal loan to renovate the house you're in now. Spruce up your current home and potentially increase its value? That's a win-win.

A third reason a personal loan may be right for you is unexpected expenses, such as high medical bills, major auto repairs, or surprise home repairs. Taking out a personal loan allows you to pay those bills at once, and avoid additional fees. With a choice of repayment terms, you can pick the term that works best for your financial situation. No matter what is going on in your life, a personal loan is worth considering. Knowing your options and determining which one works best for you can help set you up for financial success.