5 Features Of Personal Loans That Can Help You
11 Aug 2018
More and more Americans are running into debts, and the total number for consumer debt could reach a record high of about $4 trillion by the end of 2018.
According to LendingTree, a loan comparison website—which analyzed data from the Federal Reserve on nonmortgage debts including credit cards, auto, personal and student loans—Americans owe more than 26 percent of their annual income to debts. This is an increase from 22 percent in 2010 and also higher than the debt levels during the mid-200 when credit availability increased.
Therefore, there is a need for consumers to get a personal loan to consolidate high-interest debts, make variety of purchases, lower interest rates on credit cards and boost credit score.
Here are some of the feature of personal loans:
1. Flexible Terms and Loan Amounts That Suit Your Budget
A lot of personal loans are very flexible in multiple ways, making them quite unique in comparison to other lending options.
Ranging from $2,500 to $35,000, personal loans offers are flexible enough for you to choose from and apply for any loan amount that suits your need. Also, repayments plans are equally flexible, with options that may fall within the range of 3 to 7 years. While some loans may require a lot more time and paperwork to get, some personal loans are termed ‘unsecured’, as they don’t require any collateral or extra paper work to acquire.
2. $0 hidden charges
Life can get unpredictable, as one moment you’re swimming in cash and the next moment you’reemptying your piggy bank. However, a lot of people end up in serious debt due to unexpected expenses and in some cases, multiple hidden charges building up over time.
Choosing a lender for a personal loan is very important and the best choice would be to ensure that your selection has no hidden charges that can build up gradually. There are various lenders who offer zero origination fees, zero processing fees and no early repayment fees, giving you the privilege of only paying back the lender the money you had gotten after approval—required you meet the payment deadline.
Doing this makes it quite easy and straightforward when calculating the cost of your loan upfront and appropriately manage monthly payments.
3. Fixed Interest Rates
It’s quite normal to find some financial products offering interest rates that fluctuate quite often—sometimes even offering an enticing low rate that can increase astronomically, especially if you fail to meet with a payment deadline.
However, personal loans offer competitive interest rates that remain fixed irrespective of future events. This is particularly useful when it’s lower than the rates on a current revolving debt, as it saves money on interest.
4. Quick Funds Backup
There are lots of times when unexpected expenses come up and most times there isn’t a sufficient backup fund to cover these expenses. Fortunately, most personal loans provide quick funds that once approved, can be received within a week—though some providers can deliver funds as early as the next business day, so long as the terms of the loan have been agreed upon.
One of the most unexpected expenses is usually medical emergencies and getting access to immediate funds can be a big determining factor in the patient’s recovery. According to a Twitter poll, about 26 percent amounting to more than a quarter of the respondents reported that their personal loan was particularly useful in sorting medical bills. It was viewed as a great backup wallet for their normal budget, ensuring that their bank account doesn’t suffer too much a hit and can quickly recover after sorting out all the bills.
5. Reduce Stress and Regain Control
Personal loans are very helpful for debt consolidation, whereas one can take control of their bills and fix a precise payoff date. This model prevents mounting high-interest bills by helping you take control of your finances and giving you the liberty to cover unexpected major expenses without hassle.
In 2015, a survey discovered that “the average credit card customer has more than $5,000 in debt, and almost two thirds of us don’t have a tenth of that amount to cover emergencies.”However, a personal loan can resolve that problem and drastically reduce financial stress by turning several high-interest debts payments into a single fixed-rate monthly payment.
Personal loans can allow you to know how much money to pay back each month and when the loan will be completely paid off—this makes budgeting very easy. Also, it places the customer in control of their financial stability with about seventy percent of Rasmussen poll respondents saying that “taking out a personal loan made them feel more financially responsible.”