Need a Personal Loan? You May Want to Sign One ASAP

Lock in that loan before borrowing rates begin to soar.

When a need for money arises, it's generally a good idea to borrow in a manner that gives you predictable monthly payments. For the most part, that means steering clear of credit card debt, since credit card interest can be both costly and variable.

Even HELOCs (home equity lines of credit) can be dangerous from a borrowing perspective. While they're certainly flexible, they too come with variable interest rates, making them trickier to pay off.

Personal loans, on the other hand, offer the benefit of fixed interest rates. And so when you take out a personal loan, you don't have to worry about your monthly payments rising over time. That could make your loan easier to manage -- and help you avoid a world of stress.

But if you're going to sign a personal loan and take advantage of a borrowing option that comes with a fixed interest rate, you may want to do so quickly. There's reason to believe personal loans are about to get more expensive, so the sooner you act, the less risk you take of getting stuck with a rate that's just not affordable.

Borrowing rates are rising on a whole

Inflation has been wreaking havoc on consumers for months on end. And now, the Federal Reserve is doing what it can to break that cycle.

Specifically, the Fed is implementing interest rate hikes in an effort to make borrowing more expensive. The logic is that if it becomes too costly to finance purchases or take on debt, consumers will start to spend less. And once they do, demand for goods won't exceed the available supply the way it does now, thereby allowing inflation levels to ease.

Now to be clear, the Fed does not set consumer borrowing rates directly. Instead, it oversees the federal funds rate, which is what banks charge one another for short-term borrowing. But when it gets more expensive for banks to borrow, they tend to pass those costs on to consumers. And so it's fair to say that the Fed is indirectly raising consumer borrowing rates and making loans more expensive.

That's why it's important to move quickly if you're interested in a personal loan. If you wait a month or two, you could end up with a higher interest rate on that debt -- and higher monthly payments to go along with it.

Is a personal loan your best bet?

If you own a home you have equity in, you might snag a lower interest rate on a home equity loan than a personal loan. And like personal loans, home equity loans offer the benefit of fixed interest rates and predictable monthly payments.

But if you don't own a home, or don't have equity in one to tap, then a personal loan could be a good way to borrow, especially if your credit score is strong. Just don't put off that application too long, because if you do, you could wind up unhappy with the monthly payments you get stuck with.