Personal Loans: What to Know about The Good and The Bad
Updated: Dec 9, 2021
Life is unpredictable, but that doesn’t mean that you can’t plan for it. While you have no way of knowing where it will take you until it happens, there are plenty of situations in which you can be less surprised by it.
When you need funding for practically anything—home improvements, finance a wedding, consolidate high-interest debt, and more—a personal loan could be the right choice. Choosing personal loans over other types of financing has both advantages and disadvantages. Here are some important benefits and drawbacks to consider before you get a personal loan.
The Advantages of Getting a Personal Loan
They are Accessible
While many may consider personal loans a last resort, it is easier than ever to apply for one. You can get a personal loan online in just minutes with a click of a button. All you need is your name, address, employment information, and basic information about your income and credit history. The process is quick and painless and costs you nothing to apply for a loan.
They are Easy to Get
As soon as your application is approved, you can receive your loan in as little as 24 hours. Some lenders will even give you the money the same day. You can get your loan quickly, give it to your contractor, and move on with your life.
There is no waiting around for the bank to process the paperwork, no trips to the bank, and no headaches. There are many things you can buy with a personal loan that you couldn’t get with a credit card.
They are Flexible
A personal loan allows you to use the money however you want. Pay off high-interest debt, buy something for your home, finance an upcoming wedding, or consolidate your debt.
Unlike a credit card, personal loans are used for all sorts of things that can help improve your overall financial situation. You repay the money over time with flexible monthly payments, which you can do on your schedule.
The Disadvantages of Getting a Personal Loan
They Can Lead to Credit Damage
The risk of credit damage has made many wary of getting a personal loan. When you take out a personal loan, you are putting your name, your credit score, and your financial situation on the line.
If you fail to make your monthly payments, you risk ruining your credit score for years to come. There are ways to avoid damaging credit, though. Make sure you don’t spend more than you can afford and repay your money on time.
They are Expensive
The most significant disadvantage to getting a personal loan is that they cost a whole lot more than other types of loans.
The interest rate on personal loans is often higher than other types of credit. This is often because you are far less likely to pay off whatever you buy with a personal loan more than different types of loans.
For example, if you use a personal loan to consolidate high-interest debt, you are more likely to pay off the personal loan than to pay off the high-interest debt. Compare personal loans to other types of loans before you settle on one.
They Can Cause Debt
Taking out a personal means you are committing to pay off that loan. If you are already struggling with debt, deciding to take out another loan can be disastrous. If you aren’t sure how to pay off the loan, you should pass on personal loans to avoid getting into debt.
When you need extra money and don’t know where to turn, personal loans may be the answer you’re looking for. Personal loans are easy to get, flexible, and affordable, but they also come with many risks that you must consider to avoid any trouble.
Be wary of credit damage and extra debt, and only take out a personal loan if you can afford to pay it off. Remember to ask for help if you aren’t sure how to pay off a personal loan or if you can’t afford to take one out after all.
At Parkway Finance, we understand the time-sensitive need for help when short on funds. We offer a variety of personal loan sizes in Centerpoint, Alabama. We are proud to be a local company servicing local residents. If you are interested in developing a relationship with our team, please begin your application online or call today at 205-537-0438!
You can buy many things