What are the benefits of a personal loan?
The flexibility of personal loans make them attractive to a wide range of borrowers with various goals, from upgrading a vehicle to planning a holiday.
If you’re considering a personal loan, you’ll be glad to know that it offers various advantages over other loan types, offering both the funds you need now and a manageable way to repay your debt over time. Here are five of the major benefits of personal loans.
Lower interest rates
One of the chief advantages of a personal loan is that it generally offers lower interest rates than a credit card or alternative loan type. For example, the interest rate on the outstanding amount of a credit card loan could be as high as 20 percent, if not more. By contrast, the interest rate on a standard personal loan is usually less than ten percent. With RateSetter’s peer-to-peer loans, you can rest assured that you’ll be receiving the most competitive interest rate available to you at the time you apply with us for finance. As a result, personal loans are a great choice if you need affordable credit for a larger expense that you know you won’t be able to pay off all at once immediately.
You can use a personal loan for any number of things: buying a car, consolidating debts, paying for medical fees, planning your holiday, undertaking study, renovating your home, and more. In fact, the versatility of personal loans is a major part of their appeal: there are very few restrictions on how you can use them, which can make them an accessible finance type, whatever your goal.
You can choose a secured or unsecured loan
Some loans require that you possess collateral of one form or another. For example, a car loan involves your vehicle being used to guarantee the loan.
Of course, not everybody who requires finance has an asset they can offer as collateral—and that’s why personal loans can be such an appealing alternative. An unsecured personal loan offers access to finance at a competitive rate without requiring you to own an asset or commit to buying one. Instead, any risks associated with your application are reflected in your interest obligations.
There’s a predictable repayment schedule
There are no surprises with personal loans: when you commit to one, your repayment obligations are clear in advance. If you acquire a fixed-rate loan, you’ll know exactly what your repayment amounts will be each month. Consequently, it’s easy to ensure that you can afford the loan and won’t get caught off guard by increased repayments or unexpected fees.
Flexible loan terms
With a personal loan, you can choose the term of the loan, how much you borrow, and whether or not you accept the available rate. Many personal loans also allow you to make early repayments if, say, you end up with some extra cash and wish to minimise the amount of interest you pay over time. So, if you’re looking for a way to access the cash you need now but wish to retain the flexibility to pay down your debt fast in the future, then personal loans offer a sensible option.
This information does not constitute financial advice and you should consider whether it is appropriate to your circumstances before you act in reliance on it. Any opinions, forecasts or recommendations reflect the judgement and assumptions of RateSetter as at the date of publication and may later change without notice.