Do you want extra cash you can use to finance your wedding, remodeling your home or consolidating your debts? Picking a personal loan is a great way to finance such projects. If you use it wisely, an unsecured personal loan will fill the void in your budget, and you won’t be risking your house or other assets.
A personal loan is similar to other types of loans; the rates hinge depending on your income debt ratio and credit score.
It also comes with many benefits. Here are some of the benefits to consider a personal loan:
- It Provides You Lower Interest Rates
If you compare the interest rate between a personal loan and a credit card, you’ll realize a personal loan is less. Depending on the lender, the personal loans interest rates start at 5 percent.
On the other hand, it will be difficult for you to even find a credit card interest rate of less than 10 percent. The low credit card interest rate offers their customers starting at 10% and will spike higher after the end of the intro period.
- It Is Easy To Manage
If you consider a fixed rate personal loan with a lump sum, you can easily manage, unlike multiple credit card accounts that have different spending limits, due payment dates, interest rates, issuer terms, among others.
If you want to borrow $50,000 for your business, it’s best to apply for a personal loan from one provider instead of different credit cards, giving you limits of $6,000.
- It Helps You Consolidate Debts
If you want to manage multiple credit debts easily, you can consider a personal loan for debt consolidation. Using a personal loan to clear other debts and only left with a personal loan to pay in installments with fixed payments is great.
Besides, when you use a personal loan to consolidate your debts, you will end paying a lower interest rates. Many unsecured personal loans are better when used to consolidate into a single loan.
Assume you have a debt of $20,000 in your credit card that is spread across five accounts, and you’re making payments totaling to $1,000 per month.
You can apply for a single unsecured loan and be approved to get a $20,000 principal. The personal loan you get, you can use it and pay off your five credit cards. Then, the remaining debt of unsecured loan’s term, you can make fixed monthly repayments.
- It Can Provide You Higher Borrowing Limits
Depending on the credit line, most ranges under $10,000, and that’s for super-prime borrowers. Besides, each credit card spending limit falls in a range defined by card networks or issues. On the other hand, you can get more than a $10,000 unsecured loan.
While these are among the common justifications to take a new debt as a personal loan, they are also other reasons. If you’ve approached personal loan providers, you will find out that they are anxious to underwrite a loan.
It is something significant for the borrowers. The essential thing are to meet credit and income qualifications. And if you will accept lower than what you applied, the chances are that you’ll find a personal loan lender willing to lend you.