Do you smile when a waiter asks for your ID? Are you starting to feel like you’re (gasp) acting more and more like your parents?
If so, you might be in your 30s.
For many, their fourth decade on the planet is when they start acting like a true adult — and true adults have big expenses.
But before borrowing to cover those expenses, consider the pros and cons of taking out a personal loan in your 30s. Otherwise, you might be in for an early midlife crisis.
5 pros and cons of taking out a personal loan in your 30s
Not every 30-something is the same, of course. If you feel like your finances aren’t up to speed, you might want to check out our personal loan guide for 20-somethings.
Wherever you stand, it’s likely some of these pros and cons of taking out a personal loan in your 30s will ring true.
1. Pro: Consolidating the debt you racked up in your 20s
Perhaps the best use of taking out a personal loan in your 30s is to press the reset button on your debt situation. That’s because personal loans often come with lower interest rates than those of credit cards.
By utilizing a personal loan with a low, fixed rate, you could lower your monthly payment and pay off your debt faster than if you stuck with the status quo.
Say you’re down $10,000 in credit card debt and you’re repaying it with an average APR of 20.00%. If you paid off that amount via a $10,000 personal loan tagged with a 10.00% rate, you’d save more than $4,800 in repayment, according to our credit card consolidation calculator.
Now, this pro of personal loans is only a pro if you have the credit score to receive a lower interest rate. Also, you’d need to reform your credit card habits to avoid falling into the debt trap a second time.
2. Con: Borrowing for your wedding (or growing family)
If you’re approaching that age — or, more accurately, that stage of your personal relationship — where you’re about to say “I do,” you could be tempted to borrow a personal loan for your wedding. After all, it can cover the entire shindig in one fell swoop.
But if you don’t want to start your marriage digging your way out of debt, see if it’s possible to pay for your dream wedding by trimming expenses, saving up, or receiving help from your family. Those are all good alternatives to borrowing.
And if you’re looking to grow your family size in your 30s, here are three more situations where borrowing is not really the best option:
- Infertility treatment: A personal loan could help you afford in vitro fertilization. Just ensure you have the credit history to score a low interest rate on your loan — and that you’re OK repaying it even if the treatment doesn’t result in a pregnancy.
- Adoption: Adding a child to your family via adoption can cost tens of thousands of dollars. Confirm you have the income and savings to pay off a personal loan before borrowing for these costs.
- Private school: Be wary of using a personal loan to cover private school tuition, as it could put your family in debt before your child even attends college. Consider alternatives such as using a 529 plan to pay for K-12 private school tuition, seeking out financial aid from the school itself, or getting grants and scholarships you can use to cover costs.
3. Pro: Fixing up your fixer-upper
If you became a homeowner in your 30s, you might have a house that needs some fixing. Personal loans or, more specifically, home improvement loans could be used to upgrade your kitchen countertops or beautify that master bathroom.
By taking out a loan for a worthy home improvement project, you could increase the value of your home. Or you could use loan funds to pay for a cost-saving addition, such as an electric bill-cutting appliance.
Still, home improvement loans are most wisely used to solve more pressing issues on your property. A roof that leaks, a basement full of mold, or a staircase that’s falling apart — those are legitimate reasons to consider borrowing money. If you wait to save up for such a fix, the problem could only become worse.
But a personal loan isn’t your only option. Consider all the ways to pay for emergency home repairs before seeking out a personal loan offer.
4. Con: Adding debt when you should be saving up
If you borrowed student loans for an undergraduate (or postgraduate) degree, or racked up some credit card balances earlier in life, you might be sick of taking on debt. And, hey, we can’t blame you.
Personal loans come with some of the same side effects of other debt types. They require monthly payments to your lender, for example, and typically stretch on for two to five years. They also limit your ability to borrow in other, perhaps more important, ways, such as taking out a mortgage for your first home.
If you’ve worked hard to get (or stay) debt-free, you’d be right to be suspicious of personal loans. Unless you have a glaring need for one, plus the credit history to receive a great offer from a lender, forget about the option.
Instead, spend this next part of your 30s working on other financial goals, including advancing your career and earning a higher salary or learning how to invest for retirement.
5. Pro: Putting your longer credit history to use
Now that you’re past your 20s, hopefully you’ve had the time to improve your credit.
Whether you’re considering taking out a personal loan in your 30s or taking on a mortgage, higher credit scores correlate with lower interest rates. That’s important because lower rates also mean more savings for you and your family.
So what kind of credit score do you need? Top personal loan companies generally require you to have a credit score above 600. Having a score above 700, however, is more likely to open up more savings.
Having better credit should be a pro of being in your 30s, but the true advantage is that you’re older and wiser now. It should be easier to decipher if a personal loan could work for you — and whether you can pre-qualify for low personal loan rates.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|