10 possible benefits of obtaining personal loans

Not all debt is bad. Think credit cards, where consumers use them for everyday purchases, or getting a mortgage to purchase your first home.

As long as you’re responsible — you’re intentionally using loan proceeds and have a plan to pay it back — carrying debt might help you reach your financial goals. Personal loans are another form of debt that can be beneficial if used carefully. Whether you’re looking for secured or unsecured loans, there are plenty of advantages to personal loans.

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A popular alternative to personal loans are credit cards, but you may not be able to borrow a large sum.

Higher borrowing limit than other debt

Interest rates for personal loans are usually lower compared to what you’d find for credit cards.

Lower interest rates than credit cards

Borrowers who take out unsecured personal loans don’t need to put up collateral to borrow money.

Collateral is not typically required

Multiple loans tend to come with different payment due dates, lender policies, and interest rates. It’s far easier to take out a lump sum and make one payment using one lender.

Easy to track and manage

That means you’ll know for how long you’ll need to make payments.

Predictable repayment schedule

Personal loans offer a wide range of repayment terms, from a few months to a few years.

Repayment term longer compared to other loans

Making on-time payments consistently helps to build a strong credit history and boosts your credit score.

Building credit history

There are plenty of online personal loan lenders that use an application process that’s completely online.

Ease in applying

This is beneficial because you know exactly how much you’ll be changed in interest for the lifetime of your loan — no surprises there.

Fixed interest rates

The main one is that you can use a personal loan for most purposes. Some common uses include major purchases and debt consolidation.

Personal loans can be used for many purposes