Summer may be drawing to a close, but we’ve still got some time before fall and winter peek around — and in the meantime, many of us may be deciding how we want to organize our finances for the latter half of the year. While the big, spendy holidays aren’t quite yet upon us, we may already be thinking about them — and, specifically, how to fund them.
Maybe you’re too busy thinking about the upcoming college semester — whether yours or your child’s — to be thinking too hard about winter break just yet. Or maybe you’re just trying to sneak in one last epic summer vacation. No matter what your life looks like this August, here’s how to tell whether or not a personal loan might be worth considering.
1. Using a personal loan to (re)decorate your dorm room
Heading away to college, whether for the first time or for a new year, is always a big deal — and making your dorm room look like home can be an important part of the experience.
Of course, it’s easy to overspend on cute decor items, even if they’re individually inexpensive. And because personal loans are a form of unsecured debt, they can typically be used on literally anything you want, including the entire Pottery Barn catalog.
Of course, many students also use money from student loans to furnish, decorate and even secure their housing — though using any borrowed money for such expenses can be risky since loans do incur interest. (In the case of federal student loans, failure to pay may result in wage garnishment, not to mention negative impacts on your credit history.)
College is expensive enough without going into more debt than you need to. In this case, we recommend saving up some cash and hitting local thrift stores rather than taking out a personal loan.
2. Using a personal loan to fund educational expenses
Decorating a dorm room is just the start of footing the college bill. And although you could use personal loans for other educational expenses, it’s worth asking yourself twice whether you should.
Although federal student loans can certainly be tricky to repay in their own right, they do come with some tax incentives that personal loans lack. Specifically, up to $2,500 in student loan interest is tax-deductible so long as you meet certain IRS eligibility requirements. The same can’t be said for personal loans, which may also carry substantially higher interest rates, especially for young college students who don’t yet have long credit histories established. Federal student loans come with other advantages over private loans, potentially including postponement options and income-driven repayment plans.
3. Using a personal loan to consolidate existing debt
As the summer winds down, some of us may be looking back on all the fun we had with a smile in our eyes — but a hole in our wallets. From the cost of fuel and airfare to the food and fun you enjoy along the way, it’s easy to deplete your budget and rack up debt on even just one all-out vacation.
Add credit card bills to other forms of debt, like your car payment or what remains of your student loans, and you might end up feeling like you’re playing whack-a-mole each month. Consolidating your debt by taking out a personal loan large enough to pay off your existing bills could help you save money on interest in the long run, not to mention making your financial life easier to keep up with.
4. Using a personal loan to fund a road trip
Maybe you aren’t like the person in the last slide: You actually haven’t spent a bunch of money this summer seeing the world, and you’re looking to squeeze in a trip now that the sunniest season of the year is waning.
August, in particular, can be a great time for Americans to take a road trip into the desert or other places with nice, dark skies. That’s because the famous yearly Perseid meteor showers peak in mid-August — and they’re harder to see in cities, where light pollution competes with the stellar show.
Road tripping can be a relatively affordable form of travel, particularly if you’re willing to camp along the way, cook some of your meals and otherwise avoid the major expenses that traditional tourists face. But you can still easily end up spending more than you mean to while you’re traveling.
Although personal loans can be used for travel, travel doesn’t usually offer a financial return on your investment — regardless of how big the spiritual and emotional rewards can be. For that reason, we suggest saving up money ahead of time to hit the road, rather than going into debt for the privilege.
5. Using a personal loan to dial down medical debt
It’s not a pretty statistic, but it’s true: Medical costs have been reported as the No. 1 reason Americans file for bankruptcy, and anyone who’s ever felt their heart sink while looking over a hospital bill knows exactly why.
It’s tempting to turn to personal loans to try to escape medical debt, which can be both massive and instantaneous. In some financial scenarios, this might be a fruitful choice, helping families avoid more drastic measures and major credit score repercussions. However, bear in mind that there is sometimes room for negotiation, which might keep you from needing to go into more debt to pay your bills. Also, you may be able to obtain financial aid or an interest-free payment plan through the provider. When it comes to medical debt, personal loans are an important tool in your arsenal, but they aren’t your only one, so explore your options.
Reason for personal loan by state in July 2021
Key findings:
- Western states such as California, Utah and Colorado are less likely to use funds for home improvement.
- States close to or along the east coast such as New York, Connecticut and Vermont are least likely to use personal loans for medical expenses.
Alabama
Card Refinancing & Debt Consolidation 34%
Major Purchase 6%
Home Improvement 8%
Vacation & Wedding Expenses 1%
Business Expenses 7%
Home & Auto Financing 10%
Medical Expenses 6%
Moving & Relocation 4%
Other 25%
Alaska
Card Refinancing & Debt Consolidation 36%
Major Purchase 7%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 4%
Home & Auto Financing 9%
Medical Expenses 6%
Moving & Relocation 4%
Other 27%
Arizona
Card Refinancing & Debt Consolidation 40%
Major Purchase 5%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 8%
Medical Expenses 5%
Moving & Relocation 5%
Other 27%
Arkansas
Card Refinancing & Debt Consolidation 33%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 1%
Business Expenses 7%
Home & Auto Financing 10%
Medical Expenses 4%
Moving & Relocation 5%
Other 28%
California
Card Refinancing & Debt Consolidation 39%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 6%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 5%
Other 26%
Colorado
Card Refinancing & Debt Consolidation 43%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 5%
Other 23%
Connecticut
Card Refinancing & Debt Consolidation 48%
Major Purchase 4%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 9%
Medical Expenses 3%
Moving & Relocation 4%
Other 22%
Delaware
Card Refinancing & Debt Consolidation 40%
Major Purchase 5%
Home Improvement 7%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 4%
Other 23%
Florida
Card Refinancing & Debt Consolidation 39%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 1%
Business Expenses 6%
Home & Auto Financing 8%
Medical Expenses 5%
Moving & Relocation 5%
Other 25%
Georgia
Card Refinancing & Debt Consolidation 36%
Major Purchase 5%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 9%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 5%
Other 25%
Hawaii
Card Refinancing & Debt Consolidation 44%
Major Purchase 5%
Home Improvement 3%
Vacation & Wedding Expenses 3%
Business Expenses 4%
Home & Auto Financing 7%
Medical Expenses 4%
Moving & Relocation 3%
Other 27%
Idaho
Card Refinancing & Debt Consolidation 41%
Major Purchase 7%
Home Improvement 5%
Vacation & Wedding Expenses 2%
Business Expenses 3%
Home & Auto Financing 8%
Medical Expenses 4%
Moving & Relocation 5%
Other 25%
Illinois
Card Refinancing & Debt Consolidation 40%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 6%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 4%
Other 25%
Indiana
Card Refinancing & Debt Consolidation 36%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 9%
Medical Expenses 4%
Moving & Relocation 5%
Other 27%
Iowa
Card Refinancing & Debt Consolidation 34%
Major Purchase 6%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 4%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 5%
Other 29%
Kansas
Card Refinancing & Debt Consolidation 40%
Major Purchase 6%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 5%
Other 26%
Kentucky
Card Refinancing & Debt Consolidation 35%
Major Purchase 6%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 4%
Home & Auto Financing 11%
Medical Expenses 5%
Moving & Relocation 5%
Other 28%
Louisiana
Card Refinancing & Debt Consolidation 30%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 2%
Business Expenses 8%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 5%
Other 27%
Maine
Card Refinancing & Debt Consolidation 41%
Major Purchase 6%
Home Improvement 8%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 11%
Medical Expenses 4%
Moving & Relocation 5%
Other 23%
Maryland
Card Refinancing & Debt Consolidation 40%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 5%
Home & Auto Financing 8%
Medical Expenses 5%
Moving & Relocation 5%
Other 25%
Massachusetts
Card Refinancing & Debt Consolidation 46%
Major Purchase 5%
Home Improvement 5%
Vacation & Wedding Expenses 2%
Business Expenses 4%
Home & Auto Financing 8%
Medical Expenses 4%
Moving & Relocation 4%
Other 24%
Michigan
Card Refinancing & Debt Consolidation 37%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 10%
Medical Expenses 4%
Moving & Relocation 4%
Other 24%
Minnesota
Card Refinancing & Debt Consolidation 43%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 8%
Medical Expenses 4%
Moving & Relocation 4%
Other 24%
Mississippi
Card Refinancing & Debt Consolidation 29%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 2%
Business Expenses 9%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 4%
Other 28%
Missouri
Card Refinancing & Debt Consolidation 35%
Major Purchase 6%
Home Improvement 6%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 10%
Medical Expenses 6%
Moving & Relocation 4%
Other 27%
Montana
Card Refinancing & Debt Consolidation 38%
Major Purchase 8%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 5%
Other 26%
Nebraska
Card Refinancing & Debt Consolidation 41%
Major Purchase 7%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 10%
Medical Expenses 6%
Moving & Relocation 4%
Other 24%
Nevada
Card Refinancing & Debt Consolidation 41%
Major Purchase 5%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 7%
Home & Auto Financing 8%
Medical Expenses 5%
Moving & Relocation 5%
Other 25%
New Hampshire
Card Refinancing & Debt Consolidation 47%
Major Purchase 6%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 8%
Medical Expenses 4%
Moving & Relocation 4%
Other 22%
New Jersey
Card Refinancing & Debt Consolidation 46%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 4%
Home & Auto Financing 9%
Medical Expenses 4%
Moving & Relocation 4%
Other 21%
New Mexico
Card Refinancing & Debt Consolidation 36%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 2%
Business Expenses 3%
Home & Auto Financing 9%
Medical Expenses 4%
Moving & Relocation 4%
Other 29%
New York
Card Refinancing & Debt Consolidation 41%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 6%
Home & Auto Financing 8%
Medical Expenses 3%
Moving & Relocation 5%
Other 25%
North Carolina
Card Refinancing & Debt Consolidation 36%
Major Purchase 6%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 6%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 5%
Other 26%
North Dakota
Card Refinancing & Debt Consolidation 43%
Major Purchase 7%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 7%
Medical Expenses 5%
Moving & Relocation 5%
Other 26%
Ohio
Card Refinancing & Debt Consolidation 38%
Major Purchase 6%
Home Improvement 6%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 10%
Medical Expenses 4%
Moving & Relocation 4%
Other 26%
Oklahoma
Card Refinancing & Debt Consolidation 35%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 5%
Other 29%
Oregon
Card Refinancing & Debt Consolidation 44%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 9%
Medical Expenses 4%
Moving & Relocation 5%
Other 23%
Pennsylvania
Card Refinancing & Debt Consolidation 37%
Major Purchase 6%
Home Improvement 7%
Vacation & Wedding Expenses 2%
Business Expenses 5%
Home & Auto Financing 10%
Medical Expenses 3%
Moving & Relocation 4%
Other 25%
Rhode Island
Card Refinancing & Debt Consolidation 48%
Major Purchase 4%
Home Improvement 6%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 7%
Medical Expenses 4%
Moving & Relocation 3%
Other 23%
South Carolina
Card Refinancing & Debt Consolidation 38%
Major Purchase 5%
Home Improvement 7%
Vacation & Wedding Expenses 2%
Business Expenses 6%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 4%
Other 24%
South Dakota
Card Refinancing & Debt Consolidation 41%
Major Purchase 6%
Home Improvement 5%
Vacation & Wedding Expenses 2%
Business Expenses 3%
Home & Auto Financing 7%
Medical Expenses 7%
Moving & Relocation 4%
Other 26%
Tennessee
Card Refinancing & Debt Consolidation 36%
Major Purchase 5%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 6%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 4%
Other 27%
Texas
Card Refinancing & Debt Consolidation 37%
Major Purchase 6%
Home Improvement 6%
Vacation & Wedding Expenses 2%
Business Expenses 6%
Home & Auto Financing 8%
Medical Expenses 6%
Moving & Relocation 4%
Other 26%
Utah
Card Refinancing & Debt Consolidation 44%
Major Purchase 5%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 7%
Medical Expenses 6%
Moving & Relocation 4%
Other 24%
Vermont
Card Refinancing & Debt Consolidation 43%
Major Purchase 6%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 2%
Home & Auto Financing 11%
Medical Expenses 2%
Moving & Relocation 5%
Other 25%
Virginia
Card Refinancing & Debt Consolidation 40%
Major Purchase 6%
Home Improvement 5%
Vacation & Wedding Expenses 1%
Business Expenses 5%
Home & Auto Financing 8%
Medical Expenses 5%
Moving & Relocation 4%
Other 26%
Washington
Card Refinancing & Debt Consolidation 42%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 4%
Home & Auto Financing 8%
Medical Expenses 5%
Moving & Relocation 6%
Other 24%
Washington District of Columbia
Card Refinancing & Debt Consolidation 38%
Major Purchase 5%
Home Improvement 4%
Vacation & Wedding Expenses 2%
Business Expenses 9%
Home & Auto Financing 7%
Medical Expenses 3%
Moving & Relocation 6%
Other 26%
West Virginia
Card Refinancing & Debt Consolidation 35%
Major Purchase 6%
Home Improvement 8%
Vacation & Wedding Expenses 2%
Business Expenses 3%
Home & Auto Financing 12%
Medical Expenses 4%
Moving & Relocation 4%
Other 28%
Wisconsin
Card Refinancing & Debt Consolidation 40%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 2%
Business Expenses 5%
Home & Auto Financing 9%
Medical Expenses 5%
Moving & Relocation 4%
Other 26%
Wyoming
Card Refinancing & Debt Consolidation 44%
Major Purchase 6%
Home Improvement 4%
Vacation & Wedding Expenses 1%
Business Expenses 3%
Home & Auto Financing 10%
Medical Expenses 5%
Moving & Relocation 4%
Other 24%
