The Benefits of Getting a Personal Loan
A personal loan is a loan given by a bank or other lenders for a borrower’s personal needs. Some also refer to it as an “unsecured” loan owing to the fact it is not secured against any assets like a house or car. Sometimes, when you will need funds for one purpose or another, such as creating or expanding your business, paying medical expenses, paying for your kids’ school fees, getting repairs for your vehicle, paying your rent, and a lot more. Personal loans can be a good alternative for times like these. Here are some of the most important benefits of getting a personal loan.
Get Installment Payments
With a personal loan, you are lent a specific sum of money for a given period of time, and pay for it in regular monthly installments. The rate that will be given will be dependent on your credit history and credit score. A personal loan can be an ideal choice if you want to consolidate your current debt, such as credit card. It is considered as refinancing, so you may be able to decrease your monthly payment and interest rate.
Receive Lower Interest Rates
If your credit card balances and interest rates are extremely high, a personal loan may be the ideal option when you are considering debt consolidation. Depending on how much you are qualified to borrow, a personal loan can consolidate your credit card balance into your personal loan with a lower interest rate and lower monthly payment cost. Interest rates for personal loans are definitely lower than credit card cash advances or “quick cash” payday loans.
Fixed interest rates generate stability. A personal loan provides you a lump sum of money at the onset, which you can pay back over a specified term – generally spanning one to five years. Moreover, loan rates can be negotiable, which is one of the top reasons why people want a personal loan over a credit card. Another advantage is that when the loan agreement is signed, the interest rate is fixed for the entire repayment period. This denotes that your interest rate will not vary and your payments will always stay the same.
Boost Your Credit Score
If you do not have diversity in the kinds of credit you maintain, a personal loan may be a great choice. Personal loans are one component of your credit score when it comes to the types of accounts you have. Revolving accounts, such as credit cards, are only one kind of credit. These accounts denote that you can successfully handle loans that are not paid off on a regular basis.