Hello guys and gals, it is Frank here, back at it again with another finance article! Following my recent trend of discussing loans, I have another piece for you! “What is a benefit of obtaining a personal loan?” Well, to be frank (heh), it must seem like quite a nonsense question. But that would only be true at first glance! That is because, there are actually plenty that come to mind when asking what is a benefit of obtaining a personal loan.
So it might just be easy to chalk up the question, what is a benefit of obtaining a personal loan, by breaking down the word personal and loan. So in essence, you might think, hey, a personal loan is a loan where you borrow money for personal reasons, right? In which case, why even ask since it is self-explanatory, right?
Well, while you may be right, it might be better for you to just know why you are right and what the parameters are that make you right.
What Is A Personal Loan?
You might have already figured it out earlier, but I would like to finalize the exact the definition of it for you! You should know that a personal loan is a type of installment loan (a type of agreement or contract that involves gradually paying back borrowed money over time with a set number of scheduled payments) that gives you a fixed amount of money, usually ranging from $1,000 to $50,000 in one whole amount.
If you are in need of some quick cash for funds and you do not necessarily have anything on you to work as collateral, then personal loans are definitely for you. This is because they are usually, relatively unsecured. So I suppose to start off right now, that is one of the answers for what is a benefit of obtaining a personal loan.
Things You Need To Know For What Is A Benefit Of Obtaining A Personal Loan
I say need to know, instead of focusing on benefits, because there are not only benefits in personal loans, but even detriments too. It has multiple things that it has going for it, over some of the other loan types!
Here is a comprehensive list of the things you may consider an advantage for personal loans:
One Set Amount of Cash – since acquiring the personal loan means you’ll get one big fat sum of cash straight to your face, it makes things more convenient when you need that large amount of money immediately. Like, you don’t have to wait to completely get all the loaned money.
Quick Approval and Funding Process – quite usually, personal loans are actually very quickly processed. Borrowers that fit the criteria of worth being approved are approved very quickly, as well as the funding process too!
No Collaterals – very self-explanatory. Like I said earlier, with personal loans, you are able to apply quickly and safely, without risking anything you have in return! No asset (like cars, homes, other properties, etcetera) needed to get your loan application approved.
Interest Rates are Lower – self-explanatory too. Since personal loans are more often used for personal reasons and are not usually used to fund highly-expensive financial ventures, the interests are also lower to compensate.
Multi-Purpose Use – another great feature that answers what is a benefit of obtaining a personal loan! To explain it simple, quick and easy. Other types of loans such as car loans can only be used to fund a specific purpose. Like how the funds from a car loan should only be used in helping one’s self in acquiring a vehicle. Stuff like that!
Here is another list of things that you may now consider a disadvantage for personal loans:
Credit Score Is Crucial – personal loans are also much more likely to have stricter requirements in order to avail. This is because the only thing that the lenders would be able to judge you with, is using your current credit score. Meaning, if you have a poor credit, or a relatively new loaning history, there will not be an abundant amount of lenders willing to let you borrow money.
Interest Rates Are Higher In Some Cases – the advantage I said earlier still rings true, but this becomes more of a disadvantage, the lower credit score you have. So, in essence this is more of an elaboration point for the first disadvantage, and is something that you need to know when asking what is a benefit of obtaining a personal loan.
Fees and Penalties Are More Costly – self-explanatory. The fees and penalties that come with personal loans can end up being quite expensive in the long run because apart from the measly interest that the lenders get from you, this is where they will also profit from.
Conclusion
If you want the answer to what is a benefit of obtaining a personal loan, then I am your guy! I have pretty much already given you all that you need to know in answering what is a benefit of obtaining a personal loan. If you need anything else, you know where to find me!
Read also: “Ever Wonder How To Get A Loan From Cash App? (2022)”
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