Credit Education on Personal Loan
Advantages of Personal Loans
You can use a personal loan in many ways. Unlike certain credit cards that are for specific stores, you can use a personal loan on anything you need or want. Instead of incurring debt on high-interest credit cards or applying for a second mortgage, you can get the cash you necessitate via an unsecured loan.
Unsecured Personal Loans vs. Home Equity Loans
Even though home equity loans offer real strong tax advantages, there are still some very sensible reasons you should consider a personal loan instead:
Instant access to your funds; typically within hours from the time you submit your application.
Lower required borrowing amounts. You can borrow as little as $100!
No closing costs.
An unsecured loan is going to be your best option if you are not a homeowner, and looking to borrow a small amount of money and/or need cash fast. It can take weeks for you to get financing via a second mortgage.
Eliminate your debt!
Improve your credit score
In the example above, you have maxed out your available credit. With most major credit scoring companies, your credit utilization account for 30% of your credit score. If you have maxed out your credit balance it makes sense to apply for a personal loan. If you get approved by the bank, the personal loan would increase your available credit and your card balance would show paid off. You can also diversify your credit profile this way. Lets say you only have a few credit cards open. Getting a personal loan would diversify your credit profile to show your credit cards and an installment loan. Types of credit only amount to 10% of your credit score but diversifying your credit would increase the score.
Use your loan for whatever your needs are!
No collateral or security needed
There is no security needed to obtain a personal loan, so your assets will remain safe. The loan tenure is much shorter than a home or car loan. This means there is less risk for the borrower. Personal loans are more common to those who do not own any assets such as home, car, shares, etc.