Those who have ever needed hundreds or thousands of dollars in a short period of time may understand how effective personal loans can be. They generally have affordable interest rates and fixed repayment schedules to help fit into a person’s budget. What are some other good reasons to apply for a personal loan?
The Money Can Be Used for Any Purpose
One of the primary advantages of using a personal loan is that the money can be used for any purpose. This means that you can use the proceeds to start a business, consolidate your debt or buy new appliances for your home. Generally, the only thing that a lender will ask from you is that the loan is repaid in a timely manner.
Personal Loans Are Available to Most Borrowers
Another one of the primary benefits of a personal loan is that they are available to almost all borrowers. Someone with good credit who doesn’t want to put a major purchase on a credit card or get a home equity loan can get a personal loan with an interest rate as low as 5%. Those who have poor credit and don’t want to apply for a payday loan may be eligible for a personal loan with no cosigner necessary.
Personal Loans Generally Don’t Require Collateral
When you use a secured loan to borrow money, the lender has the right to take a borrower’s collateral after missing even a single payment. The collateral is then used to pay off any outstanding loan balance. This is why some people would rather take out a personal loan because there is generally no need to put up any personal property (e.g., house or car) as collateral. However, it is worth noting that a borrower could still be sued or face other penalties for failing to repay an unsecured loan.
Personal Loans Can Be Sought from Many Different Sources
While many banks and credit unions offer personal loans, almost anyone can act as a lender. If you need $500 to pay a repair bill, your friend or parent could lend you that money. If you need $10,000 to start a business, it may be possible to raise it from a group of private individuals instead of a bank. This can be appealing because private lenders may not check your credit score or worry as much about your credit history as much as a bank may.
Convert Secured Loans into Unsecured Loans
Because a personal loan can be used for any purpose, it may be possible to use it to pay off secured debt such as a car or home loan. By paying off a secured loan, it removes the lien from the title. Therefore, the asset can be sold or otherwise leveraged by the owner.
Applying for a personal loan can be beneficial in a variety of different ways. Whether you are looking for funds to start a business, or don’t want to risk losing your house, a personal loan can meet your needs and your budget.