People take on debt for many reasons, but it is often because they feel it is the only solution to their current situation. For example, Tennessee families may end up with a lot of medical debt because of an unexpected emergency. One of the fastest growing categories of debt in the United States is personal loans, which a consumer may take on because it seems like a smart option by which to deal with certain financial needs or debt relief concerns.
Across the country, personal loan balances now reach approximately $300 million, a number that indicates they are growing at a rate of 11% per year. People often choose to take on this type of debt as a way to consolidate their credit card balances or fund specific things, such as home improvement projects. However, there are some surprising disadvantages to these types of loans.
Interests rates for personal loans can vary widely depending on the consumer’s credit. Rates can range from around 5% to 30%. These rates can be affordable for some, but for others, the accumulating interest can quickly lead to balances they can no longer effectively manage. Also, the repayment for these loans can be quite short, which may make monthly payments higher than expected.
Personal loans may seem like they make sense for a person’s unique situation, but in reality, they can cause financial hardship. A Tennessee consumer who is facing unpaid personal loans and other balances may end up looking for options regarding debt relief. One option may be to seek protection through a bankruptcy filing, a step that can allow a person to discharge or pay off certain types of unsecured debt.