Borrowing money is integral to the American way of life. From buying homes to purchasing motor vehicles to acquiring goods and services with a credit card, many daily purchases in South Carolina are based on borrowed money. However, most people think of borrowing money in specialized manners, such as a mortgage or an auto loan. Increasingly popular is the personal loan, an old practice that is now adding to the average consumer’s debt.
Personal loans are not new, but they have experienced a recent surge in popularity. These unsecured loans may be for as little as $1,000 or as much as $10,000. Newer technology makes it easy for borrowers to complete online applications and get their funds in just a few days.
Many consumers use these personal loans to consolidate their credit card debts. Rather than repay several cards with varying interest rates and due dates, consumers can take out a personal loan, pay off all of their credit cards and then simply repay the personal loan. However, this only works for those who can obtain personal loans at interest rates lower than their credit cards.
Although there are certainly benefits to personal loans, they can also increase the debt load on the average person in South Carolina. Nationwide, these loans account for $120 billion of debt and are currently the fastest growing category for debt. Borrowers who are already dealing with seemingly insurmountable debt may see personal loans as a solution to their problems when they may actually add to the load. In such cases, seeking future financial security through bankruptcy may be more appropriate.