Personal loans are a very flexible borrowing tool, but here’s why you might want to avoid one.

When you need cash in a pinch and don’t have enough savings, you might consider getting a personal loan. A personal loan allows you to borrow money for any reason, whether it’s to take a vacation, renovate your home, or deal with a sudden flood of medical bills.

But personal loans are not for everyone. Here are a few reasons why you might not want to get one – and explore other borrowing options instead.

1. You don’t want to borrow so much money

When you take out a personal loan, you usually need to borrow a minimum amount, so if you only need a small loan, this may not work. Let’s say you need $ 500 in a pinch. Many personal loans have a minimum of $ 2,000 or more, and the last thing you want is to borrow more than you need to because of these rules. That said, you can currently get a coronavirus hardship loan, which allows you to borrow less than a regular personal loan.

2. Your need for money is only temporary

You may need cash in the short term to get through a brief period of financial hardship or to cover an expense that you know you will be able to pay off soon. For example, let’s say you’re on leave from work, but your employer tells you you’ll be back full-time in two months. Or maybe you have to pay for a vacation, but you get a giant bonus next month for a job well done. In these cases, a credit card with a 0% introductory rate may be a better option for you. If you can pay off your balance during this introductory period, you will not earn any interest on it. But with a personal loan, you will get stuck paying interest.

3. You have a home with enough equity to borrow

If you own a home that you have equity in, you may be able to borrow more affordably than with a personal loan. (Equity is the difference between what your home is worth and what you owe on your mortgage – the part of your home’s value that you really own.)

Home equity loans and HELOCs (Home Equity Lines of Credit) usually have lower interest rates than personal loans, and they’re fairly easy to get because your home is used as collateral. For example, if you have a lot of equity in your home and bad credit, you might still get a good rate when you borrow against your home because your property itself is being used as collateral to secure your loan. On the other hand, most personal loans are unsecured, so you might end up with a higher interest rate on one of these loans if your credit is poor.

The advantage of personal loans is that they are very flexible – you can take them out for any reason. But before you rush to apply for a personal loan, make sure it’s right for you. You may want or need to take a different route depending on your situation and the other options you have.