When one is going through difficult financial times, personal loans may be just the thing to help you get out of a tough situation. As with any type of loan, there are positives but also things that you should be aware of. Of course, it is always wise to look at all of your options before making a decision. It is a good idea to talk to a financial adviser before taking out loans of a personal nature.
Reason Number 1: You Want to Avoid Taking a Payday Loan
This is an excellent reason, and one that more and more people are stating as a primary reason for taking out small personal loans. It is no secret that the so-called “payday” loan is perceived by many to be both a terrible deal for the consumer, and predatory in nature. With extremely high fees and interest rates that reach into the triple digits, it is easy to see why these should be avoided.
Reason Number 2: A Personal Loan Can Have Many Benefits for the Consumer
Right away it is easy to see one benefit: the interest rates are far more reasonable. According to various sources, rates for personal loans range between 6.75% and 18%. With the right personal loans, consumers are able to get out from underneath a temporarily difficult situation and get back on track with their budgets, while not being trapped by increasing debt from a bad loan. Many lenders are eager to establish new relationships with borrowers, and look at lending these relatively small amounts as a good way to do just that. Another benefit would be that there is a wide perception that this kind of loan can be of help in building a better credit score.
Reason Number 3: You Don’t Have to Have Perfect Credit to Qualify
This is something that we hear all the time, and while it is true, there are some caveats that you should be aware of. Depending on your circumstances, it may be that you could do better using your credit card, or accessing your home equity, if that is a possibility. However, if that’s not the case and you feel that personal loans are right for you, know that the better your credit score is, the better deal you should be able to get. While you don’t have to have perfect credit, it is wise to take the time to go over your credit report so that you know it is correct. Another important tip is to have as many of your bills as possible showing that they are current. These few steps can make a world of difference when it comes to getting the best loan possible.