Many times when you are short on funds, it is imperative to take a loan. The problem is that if you go for any collateralized loan, the procedure is pretty long. It is not feasible for everyone to wait for 2 to 3 weeks to know the decision of the bank. The perfect solution in such a case is to go for a personal loan. Banks and financial institutions which offer personal loan often let you know about the approval or disapproval process very quickly. There are many advantages of taking this loan rather than any other. We will highlight these benefits today to help you understand why it is such a useful financial instrument.
1. Interest rates are lower than credit cards
If you’re looking for quick access to money, the only other option which you might have is the credit cards. The problem with credit cards is that not only the banks charge you up to 15% interest rate, but they have plenty of penalties associated with them. If you’re late even by a single day, chances are you might end up paying a significant amount of money as a penalty. On the other hand, when you consider a personal loan, depending on your credit score, you can get the loan at an interest of anywhere between 6% and 10%. It means that you will have to pay back a lesser amount of money when you take a personal loan.
2. Complete freedom to use the money
When you take a personal loan, you are at complete ease to use the funds. You can keep them in your account or go and buy the car which you always wanted. You can even renovate your home or use it for your medical expenses. There is flexibility when it comes to using the funds which you get through a personal loan.
3. Beneficial debt consolidation
If the debts which you have are mounting up, a personal loan is a perfect option to consolidate all of those debts. When you have a credit card loan or a student loan at a higher interest rate, you can pay it off by taking a personal loan. It will allow you to reduce the interest outgo. One of the perks of using personal loans is that you can apply for them online and get them in a relatively short amount of time. Once the interest amount reduces, it is effortless for you to manage your monthly payments in a better way. Moreover, the process to get a personal loan is relatively simple.
4. Increases your credit score
When you apply for a personal loan, it will have a set deadline. You will have to pay at this time. The advantage is that when you pay off this loan, your credit score will increase automatically. It is one of the main reasons why you should opt for a personal loan. On the other hand, when you roll over credit card debt, there is no set term. That is why each time you increase the tenure for paying off the loan; your credit score gets impacted.
5. Long tenure
Most of the financial institutions and banks allow you to take a personal loan for up to 5 to 7 years. It means that they equated monthly installments will be on the lower side. You can quickly pay back in advance as well. The choice is entirely up to you. The long tenure means that there is no added financial burden on you.
Thus, when you opt for the personal loan, it is essential to look at these few benefits. It helps the loan instrument stand out as compared to others. A personal loan can make your life very easy. It allows you to tide over any financial difficulties and lead a peaceful life without having to deal with the high-interest rate on credit cards and other debt instruments.