8 types of personal loans and their uses plus 4 to avoid

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Personal loans provide flexible financing for a variety of purposes. Here are 8 common types and their typical uses:

1. Debt Consolidation Loans: Combine multiple debts into one payment.
2. Credit Card Refinancing Loans: Pay off high-interest credit cards.
3. Home Improvement Loans: Fund renovations, repairs, additions.
4. Wedding Loans: Cover ceremony and reception costs.
5. Moving Loans: Finance relocation expenses like movers and deposits.
6. Vacation Loans: Pay for travel and leisure activities upfront.
7. Medical Loans: Cover costs of procedures, treatments, bills.
8. Small Business Loans: Inject capital for startups or existing businesses.

However, avoid these four types of costly personal loans when possible:

1. Payday Loans: Extremely high fees and interest rates.
2. Title Loans: You risk losing your vehicle over missed payments.
3. Tax Loans: Expensive way to pay the IRS versus payment plans.
4. Merchant Cash Advance Loans: These burden small businesses with confusing repayment terms.

Carefully evaluate interest rates and fees before taking out any personal loan. Explore low-interest alternatives first...