You would assume that the majority of people who take out personal loans are low-income, financially unhealthy individuals, right? Wrong! Research shows that 60% of personal loan applicants in 2016 were, in fact, people of good financial standing.
These are the 3 main reasons so many financially stable individuals take out personal loans:
Have readily available cash
Just because someone is comfortable financially doesn’t mean that he has easy access to cash. His money could be tied up in assets and/or investments. Often in life, you need quick cash to pay for those unplanned expenses. Whether it’s a wedding, unplanned travel, home renovation, or another big expense, taking out a personal loan can come in handy.
Enjoy attractive interest rates
Personal loans often have lower interest rates than credit cards. Financially stable people often like to pay off their credit card debt with a loan, thereby paying lower interest rates.
Take advantage of money-making opportunities
The cash from a personal loan could be invested in money-making opportunities such as buying stocks. As long as the projected return from the investment is higher than the cost of the loan, this is a good strategy to grow wealth.