Personal loans can prove to be a godsend in certain situations. However, there are some circumstances where alternative borrowing options would be better suited. So, how do you know whether you should take out a personal loan or not? Below, you’ll discover some of the top reasons to get a loan and some reasons you may want to opt for alternative funding.Home renovations

One of the biggest reasons people take out a personal loan from a provider such as Ocean Finance, is for home renovations. Whether big or small, home renovations not only make the house nicer to live in, but they can also add value onto the property. So, if you’re looking to sell, using a personal loan to take care of renovations could be a great investment.

You could even use it to invest in new furniture such as a sofa or bed. Personal loans are often cheaper than the finance you can get specifically for new furniture.

Unplanned expenses

Another good reason you might want to consider a personal loan, is to cover unexpected expenses. This could be medical bills, vet bills or for emergency home repairs such as a broken boiler. If you’re hit with a large, sudden expense, a personal loan can really help you out.

Typically, payday loans are marketed as the best option for unplanned expenses. However, they do have a notoriously high interest rate and the amount you can borrow is usually a lot less than a personal loan. 

When not to get a loan

So, we’ve listed a couple of good reasons you might want to get a personal loan, but what about the times it should be avoided?

Many people are opting to take out a personal loan just to cover household expenses. It’s no secret the cost of living has risen significantly over the years and many families are finding it tough just to get by. However, taking out a personal loan for this reason isn’t a good idea. This is because personal loans are designed to help with larger purchases. Alternative forms of credit such as credit cards are often better for smaller, regular purchases.

Overall, you can take out a personal loan for a wide range of reasons. However, it’s really important to compare it to other borrowing options before deciding whether or not it’s the right choice for you.