Banks and other financial institutions offer various types of loans including what is referred to as personal loans. With this type of loan, the borrower borrows money for private or personal use. In other words, you can use the funds for whatever you want; from paying bills to covering the cost of a wedding or home improvements.
You can get a secured or an unsecured loan. With the secured type, you will have to provide collateral so that if you default on your payments, the bank can offset the balance you owe with your collateral. If the advance is not secured it means you are getting the funds without providing collateral. This one is less risky because the debt will not be connected to an asset. There are advantages associated with these advances and some of them are discussed below.
Flexibility
One of the main reasons why people choose this loan is that with just a couple of exceptions, the funds can be used for just about anything; from going on vacation and making a purchase to debt consolidation and covering the costs of a function such as a baby shower. They are also great in times of emergencies such as when you have to pay for medical bills. But it would be unwise to borrow money for something that you merely want as opposed to something that is necessary. This is because at the end of the day, the debt will have to be repaid. You don’t want to put yourself in a position where you struggle to pay off the debt when the money was used for something such as a vacation.
Better Credit Score
If you know that you have a bad credit score and you need money urgently, you can still get a personal advance and improve the score at the same time. In order to enhance the score, all you have to do is to make sure that you make your payments in full and on time. In addition, you will have more diverse accounts; having a credit mix can influence your score in a positive way.
Expected payment plan
Unlike credit cards, where the repayments are based on a minimum payment and can vary with subsequent payments, with personal loans you will have a predictable payment plan that you can easily follow. You will be able to see the amount of interest you will be paying and when exactly you will finish paying what you owe.