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When cash gets tight for major expenses or financial setbacks, personal loans often come up as an option for bridging budget gaps. But determining if borrowing makes sense requires alignment between partners first. Here’s how couples can thoughtfully decide together if a personal loan works for their situation.
Review the Purpose and Need
Regardless of the financing specifics, both partners should agree a personal loan is needed and justify the purpose. Is it to consolidate costly credit card debt? Pay for fertility treatments? Fund an adoption? Cover attorney fees? Make home repairs?
Whatever the goal, ensure you both view financing this particular expense via a loan as a priority at this stage of life over saving up instead.
Evaluate Interest Savings Opportunities
If considering a debt consolidation loan, tally up total interest paid on outstanding credit card balances over projected payoff timelines. Then compare to total interest incurred through a personal loan over the same timeframe. Favorably reducing interest payments makes borrowing worthwhile.
Vet the Risks
As a couple, discuss risks of taking on a new monthly debt obligation in earnest terms. Could potential job loss or reduced hours compromise ability to cover payments comfortably? What if variable incomes fluctuate month-to-month? Address concerns openly.
Align on an Affordable Loan Amount
Overborrowing strains otherwise healthy relationships. Determine a loan amount both parties are fully on board with based on a realistic review of flexible monthly income minus existing debts and bills. Don’t pad numbers or downplay realities. Determine a reasonable figure.
Comparison Shop Rates Together
Research the personal loan marketplace hand-in-hand. Compare loan amounts, fees, terms, rates, reviews, and eligibility based on your shared credit profile and income. Weigh pros, cons, and payment differences between top contenders.
Formalize a Payoff Plan
Before borrowing, map out an exact plan for covering the personal loan payments until the balance is settled. Will you temporarily reduce 401K contributions? Cut back discretionary expenses? Earmark performance bonuses or tax refunds? Ensure repayment sources align with the amortization schedule.
When used intentionally personal loans can help couples get ahead of goals sooner. But rushed, emotionally-driven decisions end up straining relationships and finances. Weigh all aspects jointly, hear each other’s perspectives, get vulnerable about fears, and align on specifics before borrowing. Shared vision leads to unified progress!