Having a debt is not the most acceptable idea of money management that most people have, they view having debt as the root cause of all evil. However, despite what you hear from certain corners of the personal realm, having debt is not entirely bad.
For financially responsible individuals, they obtain debts through the personal loan for everyday purchases and to finance important matters like mortgage loans to purchase their dream house, secured vehicle loans or finance car purchases. All these are not possible if paid by them in cash. Today, secured and unsecured personal loans are increasingly popular with responsible borrowers. Licensed money lenders like MaxCredit, which generally have user-friendly online applications and offer the lowest personal loan rates.
If you plan to take advantage of a personal loan, here are the key benefits that you can get from securing a loan:
Lower Interest Rate Than a Credit Card
By contrast, it is very rare to find an even lower APR credit cards with regular APR under 10%, this is regardless of the qualification of the applicant. Personal loan interest is typically lower than an interest in credit cards, and this holds to different types of borrowers. Unsecured personal loan rates start at 5% or 6 %, while plenty of credit cards have low or no-interest at all in the introductory offers, it also increases to 10-20% or higher once the intro period ends.
Collateral Usually Isn’t Required
Perhaps one of the best advantages by far in securing a personal loan is that it doesn’t have required collateral. Defaulting in the payment of an unsecured loan may have a severe consequence but it is nothing compared to losing a vehicle, a dream house, or a sentimental and priceless family heirloom.
Easier to Manage Than Multiple Credit Card Accounts
Most credit card accounts have spending limits in its terms, borrowing a large amount of money may force you to obtain multiple credit cards to manage your cash expenditure. It is much easier when it comes to a single, fixed-rate personal loan because it is funded in a lump sum. Multiple credit cards also have different interest rates, payment due dates and policy issues from each other, giving you more tasks than usual.
Longer Repayment Term
A personal loan normally has a longer repayment term, depending on the type of personal loan you decide to take. They typically have a term of two to five years, but some unsecured personal loan providers offer terms as long as seven years or longer. Other alternatives lie pawn shop loans have shorter terms and have far higher interest rates.
It is always a good idea to explore and maximize your options to manage your money properly. Consider these advantages of personal loans, but remember that the ideal credit for any given situation depends on numerous factors, including income, assets, preferred repayment term, and credit line purpose.