What Are the Benefits of Personal Loans?

loan application form

Do you need to consolidate your debts, or could you use a little extra pocket money for a purchase or event? Consider a personal loan. What is a benefit of obtaining a personal loan? There are several, actually. If you make your payments on time, you’ll enjoy credit score improvement and lower interest rates than you might get with a credit card. Read on to learn more about personal loans and to see if one is right for you!

What is a Personal Loan?

Usually, a personal loan is unsecured, so you don’t have to provide collateral like your car or other assets. However, there are secured personal loans as well. The lender approves or rejects your loan application based on your credit score, debt-to-income ratio, and other factors. If your credit is good, you’re very likely to be approved and with a low-interest rate. If your credit is average, you may still be approved but you should be prepared to pay a higher interest rate.

Advantages of Becoming a Borrower

  • Lower Interest Rate Than Some Credit Cards: If you have good credit, you may be able to get a personal loan with an annual percentage rate of around 6%. Many credit cards, on the other hand, come with an APR of about 15%.
  • Wide Range of Purchases: You can use personal loans for home renovations, car repairs, medical bills, and much more.
  • Debt Consolidation: Another use for personal loans is debt consolidation. If you’re in over your head with debt, you can apply for a personal loan to pull your debts together into one lump sum.
  • Improve Your Credit Score: Personal loans diversify your credit report. If all you’ve ever had were credit card accounts, applying for and repaying a personal loan will show future lenders you’re capable of managing different credit types.

When Are Personal Loans the Right Idea?

Whether you’re struggling to repay credit card bills or need cash to cover a big event, a personal loan can be a great choice. Here a few circumstances where you may want to consider applying for a personal loan as opposed to a line of credit or other common options:

  • Your credit card debt is becoming less manageable
  • You’d like to refinance your student loans
  • You’d rather make a purchase in cash and set your own repayment terms
  • You need help covering the costs of a wedding or other big event
  • Your credit needs a boost

Apply for a Personal Loan with Xpress Cash

Does a personal loan sound like the right choice for you, or are you considering other options like payday loans? Contact us at Xpress Cash to learn more about personal loan advantages and disadvantages and how you can get started with an application. You’re also welcome to visit one of our three branches in Wisconsin, Idaho, or Michigan.