24 Million People Will Need Loans in 2016
As 2016 picks up steam and rolls into February and then March, it can no longer really be called a new year. Still, it’s early in the year, and there are surely many surprises lurking on the horizon. One thing seems certain, though: plenty of people will be looking to take out loans this year.
A recent survey predicted that 24 million Americans will take out a personal loan in 2016, and some experts say the number will be even higher. “A lot of people don’t plan for a personal loan until their roof leaks or their car breaks down,” said Todd Albery, CEO of Quizzle.com. “Since three in 10 Americans have no emergency savings whatsoever, they’re just one unplanned expense away from needing cash in a hurry.”
Personal loans are just one option for folks who need some wiggle room in their budget, or cash to cover an unexpected expense. Another option is to apply for a low-interest credit card. Credit cards with a low APR are a good way to bridge the gap when budgets and reality collide. If people pay them off quickly, they don’t end up paying much more in interest. The average credit card rate for someone with average or good credit is 15.7%.
Consolidating credit card debt saves on interest
If folks do apply for a personal loan, the interest rate can be as low as 5.5% for someone with excellent credit. The average rate is closer to 11%, which is still lower than the average credit card rate.
Another option for consolidating credit card debt is to get a balance transfer credit card with a zero-percent APR promotional period. These offers can last up to a year, and are often the best way to pay off credit card debt quickly.
Other loan options
Home equity loans and lines of credit are another option for people looking to borrow money, as long as they own their own home. These loans charge less interest but require folks to put their homes up as collateral if they default on the loan. That can be too risky a proposition for some.
Peer-to-peer lending is also big right now, with new online loan options popping up all the time. The low unemployment rate and the Federal Reserve’s low interest rate are contributing to people’s willingness to loan money, and making it easier for those who need loans to get them.