What are your alternatives?
As you consider the pros and cons of using a personal loan to pay for divorce, you also need to consider your alternatives. After all, if a personal loan is the only reasonable source of funds to pay for your divorce, getting one is clearly the right choice. But, if you have other options, you’ll need to compare those other solutions to getting a personal loan.
Some of your other options to fund your divorce may include the following:
- Using savings: This can be tricky if you and your spouse have joint access to a savings account. But, if you can access spare funds and pay your lawyer from available cash, you can avoid having to go through the loan application process or pay interest. The downside, though, is that this savings won’t be available to set up your new life after divorce.
- Charging legal fees on a credit card: Not all lawyers allow you to charge your legal fees, but some do. If you charge your legal fees, you may have to pay a higher interest rate than you would with a personal loan — and your credit limit may not be high enough to fully cover divorce costs. The upside is, you can borrow money as you need it and don’t have to take a big loan at once — and could potentially request a credit line increase if it turns out you need more money. If you can get a card with a 0% promotional APR, you could potentially also avoid paying interest on the money you borrow for your divorce if you can pay back what you owe within the promotional period.
- Borrowing from family: If you have family members willing to lend you money, you can also avoid applying for a loan and paying interest. Unfortunately, this could make your family relationships uncomfortable, especially if you can’t pay back the loan right away. And your family members may feel like they get to weigh in on decisions made during your divorce if they lend you money.
As you can see, in many cases, a personal loan is a better choice than these other options — but it will depend on your situation.
Be smart about borrowing for divorce
Whatever approach you choose, try to keep borrowing costs as low as possible by looking for ways to cut costs during divorce — such as negotiating on some issues outside of court.
And, be sure to shop around for the most affordable financing possible because you don’t want to start your new single life with a bunch of costly debt hanging over your head.
Still have questions?
Here are some other questions we’ve answered:
View more information: https://www.fool.com/the-ascent/personal-loans/articles/personal-loan-pay-for-my-divorce/