There are some loans that require a person to put up an asset as insurance before actually securing the loan. A personal loan on the other hand does not require you to do so. It is otherwise known as an unsecured loan.
Personal loans differ on the grounds of:
How do personal loans fulfill your financial needs?
1. A cheaper alternative to the credit card –
People who have credit cards, find themselves stuck with a massive bill to pay at the end of the month. Which in turn creates a dent in their bank account, raising the monthly living cost by a large margin. Here’s where one can use a personal loan instead of a credit card. Many personal loans are much cheaper than credit cards since the interest rates and monthly fees are much lower in comparison. It would also be a good idea to secure a personal loan to pay off the credit interest debt.
2. Not too many details required –
The reason for securing a personal loan is not required by the institution or individual the money is being borrowed from. In this case the only important details is whether the person is capable of paying the installments on or before the given due dates.
3. No collateral needed –
There have been several cases where people have had to lose the roof over their heads, the car they drive etc. when they were unable to pay a loan. However, this is not the case with personal loans. There is of course the binding contract that you have to sign, which states that you have to pay installments in a timely fashion. In the event that something goes wrong with regards to the timely payments, you don’t have to worry about losing your house or your car. This makes this particular kind of loan a personal favorite with people who are looking to secure a loan.
4. Relatively fast –
This is a quick way to obtain funds needed for emergency or special purchases such as a car, house etc. These funds can range from small to large amounts and are suitable for any purchase that might require an immediate payment. What personal loans do best for you is assist you in managing your short-term finances in a much easily.
5. Competition between lenders –
Since there are a lot of moneylenders out there looking to secure clients for their personal loans, they need to make their offer more attractive than the other. The best way to do this is lower interest rates. This makes it easier for people to negotiate a cheaper interest rate. There are lenders that have purpose specific loans such as loans to buy a car, a house etc. The amount borrowed is also more than the amount one can spend while using a credit card or an overdraft.
The personal loan one takes out in order to pay for tuition, house, car etc. could also contribute towards getting the tax credits when the time to file your taxes comes around. Even though not many people are keen on taxes, it would be beneficial in the long run if every tax credit one qualifies for is obtained when taxes are filed as this reduces tax liability.
ABOUT AUTHOR: SB is a financial writer who has profound knowledge on the contemporary financial world. He loves to contribute his articles to various financial communities, websites and blogs so that people who are going through distress, can read and help themselves get out of the debt mess.