Personal loans are available from various lenders to help consumers purchase the things they need. They are available for you if you need them for temporary assistance with bills, down payments, bill bonds, vacations, and shopping sprees, among other things. Personal loans have both positive and negative qualities about them. The following are two pros and two cons of personal loans:
Pro: Quick Cash for Everything
The good part about a personal loan is that an approved laon offers instant gratification for you. Once you have the personal loan funds in your hand, then you can move on to making your purchase or padding your bank account. You do not have to ask your family for assistance, nor do you have to sell any of your personal items. Personal loans allow you to have financial freedom and flexibility.
Pro: Good Credit Establishment
When you take a personal loan, you are adding a credit item to your credit report. A timely monthly payment history can bring you praise from your lender, who will pass that praise to the credit bureaus. Once you establish positive credit, then it will be easy for you to obtain credit cards and additional loans. A person loan can help your credit profile immensely.
Con: High Prices
Not all personal loans will be positive for you. Quick cash lenders are notorious for offering people personal loans with inflated annual percentage rates. In fact, some of the APRs in personal loans such as payday loans can be more than 300%. Traditional personal loans cost much less, but you could still fall victim to a lender who charges too much. Loans with high interest rates are difficult to pay off because the monthly payments barely cover the balances.
Con: Payment Protection Insurance
Payment protection insurance is a special element that many credit card companies and personal lenders offer their customers. You would have to pay an additional monthly fee to receive this special insurance. The insurance is supposed to cover your payments if you ever become disabled or unemployed. Additionally, the insurance is supposed to cover your payments for up to 12 months from the onset of the payment problems. Payment protection insurance might cost as little as $6 a month or as much as 25% of your total debt. Therefore, it adds additional expenses to something that is already expensive.
Before you select any personal loan, you should review at least three lenders. You can find helpful information on each lender’s website about fees, telephone numbers, and testimonials. You can then call an associate and speak with that person about providing you with additional information. A friendly customer service representative is a good sign that a lending institution is honorable. You can receive many benefits from personal loans, but you have to choose the right provider before that can happen. Check to see if you can find a prospective provider’s name with the Better Business Bureau, and look for information about the organization there.
