A personal loan is a lump sum of money borrowed from a credit union, bank or another lender at a fixed rate of interest for a fixed period of time. Most personal loans are unsecured, meaning the borrower does not need to put up any collateral. A big advantage of personal loans is that they can be used for almost any reason at all. Unlike mortgage loans, student loans or auto loans, personal loans can be used for debt consolidation, for a medical emergency, a vacation or pretty much any big expense at all.
Does a personal loan make sense for you? Answer the following questions to see.
Will a personal loan save you money?
Personal loans may cost less over the long haul than other forms of borrowing. This may mean a lower rate of interest than existing credit cards or other loans when used to consolidate debt. It can also mean a better rate and terms than a retailer when buying a large ticket item. If a personal loan is going to save you money, it’s a positive sign. Keep in mind that the interest rate for which you qualify will be dependent on your credit history.
Are you in need of a house remodel or renovation, but have no equity built in your home?
If this is the case, a home equity loan is probably off the table for you. If your house is in need of repair or remodel, charging up your credit cards to complete the project may end up costing you an arm and a leg. A low-interest personal loan, on the other hand, may be able to help you achieve your home remodel goals at a price you can afford. It’s definitely worth discussing personal loans with your credit union lender.
Are you in urgent need of cash for an auto repair, home repair or for an unexpected expense?
Personal loans can be quick and easy to apply for, giving you the money you need when an emergency strikes.
Are you looking for a structured loan payment schedule?
With a personal loan, you borrow money at a fixed interest rate and set term, which equals a fixed monthly payment. That’s a big benefit of personal loans. You will always know what your payment will be. You won’t have to worry about fluctuating interest rates. Your credit union lender will be able to tell you your monthly payment based on the interest rate and term of the loan. That’s that. You won’t end up with any big surprises along the way.
Are you looking to borrow a specific amount of money?
If you know the exact amount you want to borrow, a personal loan is a good option. If you’re unsure of the amount you need, or you are looking to borrow a little at a time over a certain period of time, a personal line of credit may be a better option for you.
Can you afford a set monthly loan payment for the entire term of the loan?
With a personal loan, you have one monthly payment and you need to make it. Unlike paying the absolute minimum on those credit cards or changing your payment from month to month, you must make your set personal loan payment every month. Your personal loan will have a set term as well, which gives you a timeline to pay off your debt.
Is a personal loan for you?
In conclusion, if you answered yes to most of the above questions and feel a personal loan can help you achieve your financial goals, then it’s time to shop around. Look for the best personal loan rate and terms to fit your individual needs. Remember, your local credit union will give you the personal attention you deserve, as well as great rates. Check the personal loan rates at Benchmark Federal Credit Union. They may be much lower than that high-interest credit card you’re thinking about using. Visit us online and discover what Benchmark can do for you!
Read more about using personal loans to consolidate debt or learn more about Benchmark’s personal approach to lending by reading our blog.