- Posted by: Administrator
- Category: Finance
A personal loan can be a great financial product for some people who are looking to consolidate their debts or make a ‘big ticket’ purchase, such as buying a car or undertaking a large home renovation project. One consideration when looking at taking out a personal loan is whether it is the right financial solution for a particular person or scenario. You might find yourself with the option of taking out a personal loan, buying a vehicle on hire purchase, or opening a credit card account, for example.
Depending on your financial circumstances, you may be in a position to take out all three. If you are instead looking at your options with an aim of using just one of them, you need to know all the details before deciding to proceed.
Here are some amazing facts you should know if you’re considering a personal loan as one of your solutions.
You Can Have a Fixed Interest Rate
A fixed interest rate when you take out a personal loan means two things:
- You know what your repayment amount is and can budget effectively, as it will never change.
- You know exactly when you will have paid off the personal loan.
You Have an End Point
Building on point two made above, a big difference between a personal loan and other types of credit is that there is an end. While a personal loan may have a ‘withdrawal’ facility depending on your provider, this usually won’t be the case, meaning you aren’t able to access ‘revolving credit’ in the same way you could on a credit card. Having an end point to a loan also helps avoid falling into the debt cycle.
When taking out a personal loan, you generally use the loan for whatever purpose you have taken it out for, then repay the money as per the agreed schedule. In contrast, with a credit card the account stays open until you close it, and as you repay you will always have the temptation of going out and using it.
Credit can be Easier to Obtain
Another potential advantage of there being an end point is that a personal loan can sometimes be easier to obtain than a credit card. While you still need to manage your finances no matter what type of credit you are using, the process of receiving a personal loan and repaying it in equal, regular instalments can be more straightforward than managing a credit card with a particular limit, with regular spending and repayments to be managed as well as potentially variable interest rates.
You Have Flexible Options
The lender will set the interest rate and the repayment amounts depending on how much you are looking to borrow and the time over which you are looking to pay back the loan. Yet you have the flexibility to decide how much you wish to borrow and the time over which you wish to repay. You can tailor these both to your needs now as well as your financial circumstances to ensure repayments are affordable and are not going to cause you undue stress and financial difficulty.
Depending on the lender, you may also be able to make additional repayments or full early repayment at little or no charge, but you should check this before taking out the loan.
If you have considered your financial situation carefully and can afford the repayments under your loan terms, all of these points could represent benefits of taking out a personal loan. If you would like to discuss a personal loan for yourself, contact us now to get a representation of what your loan and repayments may look like.
SOURCE: CONSUMER IQ