What Is A Personal Loan And What Are Its Benefits

By: Raymond M. James

About the Author:

Ray is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.

The personal loan is one of the world’s preferred loan options. They allow you to get a loan very rapidly, right up front, so that you can spend your money on a personal objective you might have had in mind for awhile. For example, many people spend personal loans on dream vacations or home improvement projects. Whatever your personal wants and needs are, personal loans can help you accomplish those goals.

A more specific way to think of a personal loan is that it’s a loan you take out that has a repayment period of between one and five years. It’s used on personal goal projects or wants. Why does this type of loan benefit you so much?

  1. More Money

Credit cards often have frustratingly low borrowing limits. $3,000 isn’t going to cut if your personal project is to renovate your entire home. These projects easily run into an amount of money that a credit card simply won’t pay for. Credit cards also entail higher interest rates than your average personal loan. Personal loans have lower interest rates and give you more money up front than other traditional loans.

  1. No collateral

Having to put up collateral for a loan can be an extremely difficult thing to do. You’re potentially risking losing something important – such as your vehicle – in order to get something else you want. In the end, what you’re putting up for collateral is often as or more valuable than what you’re using the personal loan for. So there’s a tremendous amount of risk. Personal loans don’t require collateral in almost every case.

  1. One loan, one place

Financing a personal improvement project, car, or vacation with a batch of credit cards is a nightmare credit scenario. You’re getting a confusing tangle of credit card payments and a confusing mess of interest rates, all different for each one you use. With a single personal loan, you have the convenience of all your payments to one vendor and in one place. Personal loan superstar RapidLoans is one example of how to do a convenient personal loan right. They simplify everything.

  1. Longer repayments

The longer you have to repay something, the more convenient and flexible your budget is going to be. We never know what our financial needs will be from one month to the next. One month you’re fine; the next month, you have a huge car repair bill. This prospect of unforeseen expenses can leave you in a real bind when it comes to repaying multiple credit cards or smaller loans off over time. With a large personal loan, you have a lot more room in your budget for those pesky unforeseen expenses, and you can also have longer to repay the loan overall. That’s a big perk.

  1. Lower interest rates

With a longer repayment period, you want to make sure that you get lower interest rates, and personal loans are wonderful on interest rates. When you’re given lower interest rates like you get with personal loans, you not only get a loan faster than you might another type of loan, but you’re going to have a much lower interest rate, something that saves you plenty of money in the long run. Interest rates will always be the #1 thing you need to look at in terms of your loans. You want a fair interest rate that’s as low as possible, while still giving you flexibility in repayment. One of the primary advantages of personal loans is their reputation for lower interest rates than borrowing from outlets like credit card companies.

As you can see, a personal loan is an intelligent way to get a loan fast. They offer lower interest rates than other lending platforms and give you a longer amount of time to repay the loan. Best of all, they give you wiggle room in your budget because they’re able to have all of your money up front and then budget from there based on what unforeseen events might come up over the repayment period. The end result for people who take out personal loans is a large sum of money up front, lower interest rates, and the security of being able to budget over time with some extra financial padding if an unforeseen disaster arises in your life during the repayment period. It’s a win all the way around.

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