A personal loan is a loan agreed upon with a bank or other lenders for a borrower’s personal needs. Some people also call it an “unsecured” loan since it is not secured against any assets such as a house or car. There may be instances when you will need funds for one reason or another, such as building or expanding your business, paying medical fees, paying for your kids’ school fees, getting your car repaired, paying your rent, and many others. Personal loans can be a good alternative for times like these. Here are some of the top reasons to get a personal loan.
Pay in Installments
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 you pay will rely upon your credit history and credit score. A personal loan can be the best alternative if you want to consolidate your existing debt, such as credit card. It amounts to refinancing, so you may be able to reduce 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 undoubtedly lower than credit card cash advances or “quick cash” payday loans.
Fixed interest rates generate stability. A personal loan gives you a lump sum of money immediately, which you can pay back over a fixed term – normally over 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 benefit is that when the loan agreement is signed, the interest rate is fixed for the full repayment period. This denotes that your interest rate will not vary and your payments will always stay the same.
Improve Your Credit Score
If diversity is not present in the kinds of credit you maintain, a personal loan may be a a good idea. Personal loans count toward your credit score when it comes to the kinds of accounts you have. Revolving accounts, such as credit cards, are only one form of credit. These accounts imply that you can deal with loans that are not paid off on a regular basis.