Top Reasons To Get A Personal Loan
Why are personal loans the new norm for making payments?
People who are financially responsible often use credit cards to their everyday purchases or to finance their vehicle purchases via secured loans. They also take out mortgages to get a home. These are a few examples of what they use loans and credit for.
Financially responsible people also turn to unsecured and secured loans. Compared to credit cards, payday loans and so forth, unsecured loans have many benefits, but secured personal loans are beneficial too.
With that said, let’s go over a few of the benefits of these types of loans and why you should consider applying for them.
The Top Benefits Of Getting A Personal Loan
Why should you apply for a personal loan over credit cards and other options? There are several reasons, but do bear in mind that your chances of being approved for a personal loan all depends on your situation. That said, here are a few reasons and benefits:
1. High Borrowing Limits
Generally speaking, credit cards don’t offer that much of a borrowing limit, especially to relatively new customers and your credit needs to be perfect if you do want to land a high credit limit. If you are a weak applicant (meaning poor credit), then you can expect to maybe be approved for a few hundred Pounds. The strongest ones may receive a few thousand, if they are lucky.
There are no annual fee cash back cards. Limits on these cards can be high, but still not that high. Also, there are a number of factors used when deciding how much your spending limit will be. The top ones include:
. Bankruptcies on your record
. Delinquencies
. Your debt to income ratio
. Your credit score
. Payment patterns on any other credit accounts in your name
. Your income
. Your employment history and status
With personal loans, the borrowers tend to be much more generous than the credit card companies. What you’ll be offered does depend on the lender, but many lenders do give high amounts.
In fact, there are some companies that give out loans as high as £100,000, but not all lenders will go that high.
2. Low Interest Rates
Personal loan rates are not usually that high. At least when compared to credit card interest rates. If you’re a highly qualified buyer, then you can expect to enjoy a low rate. Many loans start off at 6% APR for borrowers who are considered highly qualified.
Regardless of the strength of the applicant’s credit score, lenders still tend to keep their interest rates lower than most credit card companies. It has always been known to people that credit cards come with very high interest rates.
Some cards’ rates spike suddenly after the introductory period comes to an end.
With this in mind, the professionals over at Domain Metal Roof & Plumbing highly suggest gaining a personal loan when it comes to your homes roof or plumbing. They suggest this as personal loan helps you get the best bang for your buck for their service.
They explain that “With a personal loan, you can receive one payment from the lender and then focus on paying that one payment back and not several payments at any given time. So instead of paying for several smaller jobs at the same time, a personal loan lets you pay for all our services together at once. This payment can be paid overtime, making your wallet happy.”
Not only that, but interest rates for a personal loan are quite low, which further helps you stretch your dollar.
3. No collateral required
Another benefit is collateral isn’t usually required. You will not have to lose your property if you default on an unsecured personal loan. However, there are severe consequences of defaulting on a loan, but at least you won’t lose everything you own.
4. Easier To Manage
A personal loan is easier to manage than several credit cards. When you have several cards, you have to deal with multiple payments, interest rates and policies to name a few. With a personal loan, you can receive one payment from the lender and then focus on paying that one payment back and not several payments at any given time.
So, whether you want to get a brand new wardrobe or just want to treat yourself, a personal loan is incredibly helpful, especially when making multiple payments.
Paula who runs the clothing store Tierra Alma explained that “customers who come in wanting to bulk buy often have a personal loan which allows them to pay for clothes in a manageable and easy fashion. When it comes to simplicity, personal loans are the best choice”.
5. Repayment Schedule
The repayment schedule with personal loans are predictable. There are many loans that come with fixed interest rates and monthly payment plans. When you are approved for a loan, you’ll know exactly what your payments are and when you will need to make them. You won’t be hit with surprised charges.
With credit cards and other types of credit, your payments are not always predictable. You will have to make monthly payments, but those payments may go way up if you are on a variable rate. This is one of the reasons people fall into debt so easily with credit cards.
6. Longer repayment Terms
Many lenders who give personal loans out will have long repayment terms. Sometimes you’ll have 2-5 years to pay the loan back. Some lenders even have longer repayment terms than that. Other types of loans and line of credit options do not have generous repayment terms and their interest rates are very high.
However, you need to do your research and make sure you don’t apply for just any old loan or accept the very first loan offer you’re approved for because not all personal loans are created equal, even if many of them are far better than credit cards.
Before choosing a loan provider, research their terms in regards to interest rates and how much your repayments will be on a monthly basis or the frequency of the payments if they don’t do monthly repayments.
Looking for an estimate for your next personal loan? Try out Falcon Finance’s rate estimator.
What will you be using your personal loan for on your next big spend?
Contact the team at Falcon Finance to learn more about personal loans.