In the war against high interest rates, consumers have plenty of options according to service credit expert Gordon Simmons. They can do everything possible to pay off credit card balances but still might need access to a line of credit. Fortunately, we live in a time and place where responsible consumers can obtain personal loans from their favorite banking institution or credit union. Outside the banking system, many independent companies have sprung up that offer loans to individuals and businesses. If you’re wondering about the ins and outs of personal loans, here’s a brief look at the key ways in which these versatile arrangements can be a smart way to maintain a financially stable lifestyle.
Very Versatile
One of the many advantages is versatility. You can use the proceeds for whatever you want. Need to pay for a vacation, medical bills, new furniture, a business venture or unexpected car repairs? A personal loan is best suited for unplanned or expensive items. Unlike some types of home equity and education loans, personal loans have additional flexibility as to what they can be used for.
Consolidating Debt
One of the best things about personal loans is their ability to kill off high credit card interest payments. For consumers who have decent-enough credit to obtain financing, they can be the ideal way to consolidate several credit cards balances into one, pay the cards off, and end up with a single payment on a much lower-interest personal loan. In fact, high credit card interest rates have been one of the biggest factors propelling their popularity during the last decade.
Offered by Many Institutions
If you are in the market for a personal loan, there are plenty of places to look. Many borrowers turn to their own banks and credit unions, but there are also online banks, non-bank companies and peer-to-peer lenders who offer personal loans. That’s good news for consumers who prefer to shop around for the best rates and terms.
Installment Payback is Simple and Transparent
Unlike open lines of credit and traditional credit card financing, personal loans don’t involve a lot of heavy math or complex repayment structures. A standard personal loan is repaid in equal monthly installments for a fixed period of time at a fixed interest rate. Compared to nearly every other financial instrument, this type of payback is predictable, transparent and stunningly easy for consumers to understand.
You Don’t Have to Wait for a Decision
One reason they are growing in popularity is the speed of approval. After you apply, lenders typically let you know their decision within a day or two, and then the money gets to your bank in about the same amount of time. For people who are facing a quick need for cash to pay for a wedding, vacation, car repairs or medical bills, personal loans have the advantage of speed. Plus, compared to credit cards and credit card cash advances, personal loans usually carry much lower interest rates.
