Why Are Personal Loans a Good Idea

money

Are you in need of financial help? Are today’s financial troubles putting a strain on your hard earned cash? Is what you make not enough to sustain yourself and your family? Due to all the financial problems, affecting millions around the world, it’s essential to know some of the reasons why we need loans.

Increasingly in today’s society, people are faced with scenarios in which they need a primary source of funds, but short-term borrowing is unfeasible for any of some reasons. For anybody in this situation, the most convenient solution is a personal loan (also known as a ‘cash advance’ or ‘fast cash’). Especially for people who cannot demonstrate a good credit history or those who cannot turn to family & friends for help, a personal loan is the quickest way to get through a short-term cash flow crisis. So, are loans really helpful? Well, below are some of the reasons why you need a loan.

Unexpected Bills

billsImagine the hardship caused by an unexpected bill. All of a sudden you are faced with having to pay out a significant amount of money by the end of the week, and you don’t get paid until next month. More and more people are faced with precisely this problem and the stress that follows. One of the few solutions is to secure the cash you need with a personal loan to avoid any potential penalties or other consequences of later bill payment.

Medical Expenses

We are all aware that medical treatment or hospital stays can be costly; if you are involved in some accident and don’t already have health insurance or medical cover, you may need to find some extra money very quickly to pay the costs incurred by your care. Taking out a personal loan should be one of the first options you consider to get the cash you need in the circumstances like this.

Home Renovations

If you’re a homeowner and you’ve ever started on some home improvements, you’ll remember how often your renovation plans take a turn for the unexpected. More often than not, starting one project around the house leads to finding other things that need repair, blowing out your carefully planned budget with a whole load of unexpected expenses. You can stop work and leave your renovations unfinished, or you can look at getting some fast cash through a personal loan.

Better Interest Rates

It’s crucial that you always do your research before committing to borrowing money. You’ll usually find that you can get the lowest interest rates, and thus more affordable repayments, from a direct lender’s loan, because direct lenders are not structured to have to pay commissions to agents or brokers, and they can pass these cost savings straight on to the borrower.

During the process of loan application, it’s also essential to ensure you read through all the relevant terms and conditions attached to the loan, especially the ones that relate to ‘hidden’ fees & charges. The best way to avoid extra expense after you’ve secured the loan is to know what’s involved before you start.

What You Need To Know About Personal Loans

You can borrow a personal loan from any financial institution or bank. Personal loans are classified under the general purpose loans. This loan can be used to meet your personal needs such as payment of hospital expenses, consolidating debt, home repairs or improvements any much more.

These loans are also used for catering other expenses such as fees payment and paying for holiday trips. The borrower is expected to meet some pre-requisite qualifications when obtaining these loans. Here are some of the characteristics of personal loans that you need to know.

They are secured

This means as a borrower you are not required to have any asset to qualify for a loan. This makes it harder to obtain such a loan since lenders are unable to claim your asset or any other property in case you are unable to repay your loan. However, other actions can be taken by the lender if the borrower fails to repay the loan such actions include hiring collection agencies or filing a lawsuit.

Most of the collection agencies are known for using intimidating tactics such as constant harassment even though this is illegal. The loan amounts offered are fixed rating are offered loans at a lower rate as compares to people with a poor credit rating.

These loans are fixed

The amount offered is based on the income of the lender, credit rating, credit history and borrowing history. However, there are some banks which offer pre-fixed amounts as part of the personal loans.

They have fixed interest rates

The interest rates on loans do nohbjgiugffyfy;.;ojopoht vary depending on the repayment period. The interest rates on the pre-fixed loans are mainly based on the credit rating. This means that individuals with a good credit rating can get loans with low interests. They also offer loans with variable interest rates. Loans with varying interest rates are sometimes difficult to manage when making the payments.

These loans have fixed repayment periods

The repayment period for the personal loans is usually spread over a fixed term. The repayment period for the short term loans ranges between six and twelve months while for large amounts can be scheduled over five to ten years. This means that long-term loans have high interest rates due to the longer repayment periods as compared to the short term loans.

Affects credit scores

The credit bureaus also monitor personal loans. The account details of your loan are submitted to this body by the lenders. Default on payments is likely to affect your credit rating thus reducing your chances of securing future loans.