Loans are handy financial tools we can use to bounce back to stability. It helps you afford things when you are short on funds.
When we think of loans, we used to associate it with banks. This is because banks are known to provide financial assistance to their clients. However, bank loans require a long list of requirements before they approve a loan application. Since banks are risk-averse, they scrutinize every detail to make sure that you will be creditworthy. But too many requirements lead to longer loan processes.
Fortunately, there is cash mart licensed money lenders who offer fast cash loans. Since their personal loans are usually unsecured loans, they do not require any collateral. This means less documentation and a faster process.
Gone are the days when you need to personally meet your lender. Nowadays, people can even borrow online. Here are some personal loan benefits that you can enjoy.
Lower interest rate compared to credit cards
In case you do not know it yet, credit cards do not charge interest rates unless you default on your due date. Many pay around 15% APR on a credit card balance. On the other hand, you can get a personal loan which you can pay in installments at a fixed interest rate.
You may say that credit cards have the 0% interest rate for the high ticket purchases. Unfortunately, you had not considered the interest rate that will kick in once you fail to pay on time. Add to that, you can’t ask your bank to stop charging you as they have very strict policies.
When you get a personal loan from a licensed lender, you can ask for a flexible payment term to avoid incurring the late interest charge.
Multi-purpose loans
More and more establishments are accepting credit cards, but most if not all still accept cash. What will happen should you go abroad and you want to purchase in shops that do not have card portals?
Here’s the kicker: Cash is still king.
Having a personal loan gives you the freedom to use your cash in any way you want. You can purchase various things. Let’s say you can use part of it for your kids’ school expenses and part of it for your car repair. With credit cards, installment payments are only available with participating merchants.
There is a required minimum purchasing amount. This will force you to spend more than you should.
Bridge your financial gap
It is not uncommon for micro business owners to experience low sale turnouts. This is because some clients fail to pay on time. You can’t halt your operations and jeopardize your business. But you also can’t skip paying your employees. It’s fortunate that you can get a personal loan to cover these costs. Charge you late paying clients more and this can cover your personal loan payments.
On the other hand, if you are employed and you got short on cash, you can get a personal loan to survive till the next payday. You can buy your daily necessities and commute every day.
Boost your credit score
Getting a personal loan from the lenders included in the list of licensed money lenders will help you find the best loan deals. This way, you can avoid loan sharks who are on the lookout for people who needs personal loans.
Add to that, if you get a loan from a licensed lender, you can boost your credit score. Legal lenders are mandated by the law to report the credit information of their borrowers to the credit bureau. If you pay your loans on time, your good payment habits will then be added to your credit history. Once you decide to finally buy a house or a car, you can easily get approve and get better loan deals.
While you think that credit cards can also boost your credit score, you must remember that credit score relies on different types of loans. A good mix of loans such as revolving credit (credit card) and installment loans can give you a better score.
Consolidate your debt
Credit cards have what you call the “balance transfer.” This means that you can open up a credit card that can pay your existing credit card debt. Viola! You only have one debt to focus on. But what if you have more loans other than a credit card debt? Wouldn’t it be more convenient to get a personal loan which you can use to pay a different type of loans?
With a personal loan, you can pay your friend, family, credit card bill, utility bills, and other overdue payments.
Final Thoughts
When you get a personal loan, you have to make sure that you get only from a licensed lender. Take note of all the interest rates and charges to compare the loans. Then, choose the one that best fits your needs and ability to pay.
