How Personal Loans Can Help Fund Your Divorce Debt
In Tennessee, the average divorce costs approximately $10,000 in attorney fees and around $3,000 in other expenses. This is just a bump higher than the national average. If you have alimony or property division difficulties, you may expect to spend about $17,000.
While divorce is costly, the expenditures of obtaining competent legal counsel are well worth it. The divorce settlement you make will influence your future personal finances, the property you get, and even the amount of time you have with your children after your marriage ends. When it comes to hiring a qualified lawyer, you cannot afford to cut corners – but you must decide how to pay the expense in the most cost-effective way possible.
When it comes to finding finance for legal fees, many people going through a divorce are unsure where to begin. A personal loan might be the most practical funding strategy for a large percentage of divorcees.
Is a Personal Loan a Good Divorce Option?
Divorce attorneys can charge hundreds of dollars per hour, so their costs can quickly mount up. In addition to lawyer and court expenses, you may need funds to start a new lease on life, such as relocating to and furnishing a new home. It's usually better to pay for these expenditures using savings to avoid incurring additional debt. However, if your funds are insufficient, a personal loan may be an option.
For starters, personal loan interest rates are generally cheaper than credit card interest rates. If you have excellent credit, you can get a personal loan with a meager interest rate. You'll still have to pay interest every month, which increases the ultimate cost of your divorce, but it might be substantially less than what you'd spend if you put it on credit.
A personal loan will also often provide you with a greater quantity than you would be able to obtain through a credit card or savings. If you need a large amount of money to cover divorce bills, a personal loan may be a better option compared to a credit card.
In addition, unlike a credit card, a personal loan often has fixed monthly installments, which might make it simpler to incorporate it into your budget. A loan is a one-time payment that you make in installments over time, generally for several years.
Things to Think About Before Getting That Loan
First, evaluate if you will be able to apply for a personal loan. If you have decent to exceptional credit, which is defined as a FICO® Score of 670 to 850, you have a high chance of qualifying for a low-interest personal loan. If your credit is fair (a score of 580 to 669), you may be able to qualify for a personal loan, but the interest rate will likely be high. An unsecured personal loan may be out of the question if your credit score is less than fair. Keep in mind that lenders are also looking for a consistent source of income to guarantee that you will repay your debt with diligence.
On that point, before you take out a loan, consider the projected monthly payback and ensure that it will fit into your budget. Late or missing payments may harm your credit score, so only take out a divorce loan if you're confident that you can repay it on time each month.
Also, keep in mind that you cannot raise the loan amount afterward. If your needs are likely to fluctuate or rise, it may be preferable to use revolving credit, such as a credit card or line of credit, which allows you to borrow only what you need.
Whatever strategy you use, try to keep borrowing expenses as low as possible by searching for ways to save money during the divorce process, such as settling specific problems outside of court. Here at First Finance, we know loan applications are the last thing you want to add to your divorce paperwork. This is why we make the process straightforward so you can get funds as quickly and as effortlessly as possible. Get in touch with us today to see how we can help with a personal loan.