Should You Get A Personal Loan? The Pros & Cons

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Unfortunately, the cost of living is rising a lot quicker than our income, which means that sometimes we find ourselves short on cash. Personal loans are a fast source of cash that people often apply for, but is a personal loan right for you? Here are a few pros and cons for you to consider before you apply for anything.

 

Pro – Quick Source Of Cash

Personal loans are fairly quick and easy to apply for, and you generally get an answer for your application form within 24 hours. This means that, if you’ve been approved, the cash should be in your account in a maximum of a few days. This is great if you’ve had an emergency, and need money fast so that you can fix it.

Con – Have To Pay Interest

Although the interest rates of personal loans are generally lower than those of credit cards, that doesn’t mean that you can afford to fix loan repayments into your budget, especially if your interest rate is relatively high. To avoid this, be sure to shop around to find the best deals. Personalloan.co has information on getting cheap personal loans if you’re struggling.

 

Pro – Great For Bigger Expenses

If you’re looking for money to make a big purchase, credit cards usually aren’t very helpful, as they tend to have a limit of a couple of thousand dollars at most. Personal loans, on the other hand, can go from a couple of hundred dollars to well over fifty thousand, so are a much better option if you’ve got big plans for your cash.

 

Con – Harm Your Credit Score

If you apply for a lot of personal loans in a short space of time, you are going to negatively impact your credit score. Although this won’t make it impossible for you to get credit, you will find it incredibly difficult, and will likely have to pay very high amounts of interest on top. Ensure you only apply for loans that will accept your credit rating (there are even lenders that will accept people with bad credit if you have a look around) and don’t apply for more than one loan every couple of months.

 

Pro – Consolidate Your Debt

Lots of people use loans as a way of paying off their other debts. This will mean that they only have to make one payment each month, and only have one debt on their shoulders. This can be much easier to manage than several smaller debts and will ensure that you don’t forget to pay one thing or another, and then have to pay late-payment fees on top.

 

Con – Just Moving Debt

Although it makes sense to some people to use a personal loan to pay off debt, to others it makes no sense. After all, you’re not actually paying off any of your debt, you’re just moving it onto a loan instead, which could potentially have a higher interest rate than your other debts, thus costing you more money. Visit thebalance.com for other ways to consolidate your debt.

 

For some people, it makes sense to apply for a loan, whereas other are deadset against them. Weight up the pros and cons before you make any big decisions and start filling out applications.

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