If you need to borrow money, there are a few options available to you – each which distinct benefits and terms. If you need money in a hurry, don’t have any sizeable assets and want the flexibility to use the loan for whatever you desire, then a personal loan may be the right option for you. The following points are the top five benefits of personal loans, so that you can make an informed choice of the best loan type available for your specific circumstances.

Flexibility

Do you want cash without having to explain your reason behind it?

Personal loans are multi-purpose. Unlike a home loan, you can choose to use your personal loan for anything you want. While you can use the cash for almost any (legal) purpose, it is always best to limit borrowing for specific financial or emergency needs. Obtaining a personal loan is also the quickest option of loan available, in some cases you can get the loan within 24 hours. The reason personal loans are so quick is that they do not require the same lengthy documentation procedures that apply to more substantial loans or credit cards, with less stringent approval guidelines available for a personal loan. This makes a personal loan a great avenue for people who require unexpected, emergency funds. This flexibility extends to contract terms, with the length of the loan able to range from 2-10 years in some cases.

Pay your debt back in installments

Do you want a clear timeline for repayment?

Another advantage of personal loans is that you pay a set amount for a specific length of time, providing you with a clear beginning and end to clearing your debt. However, making more than the minimum payment at some installments will improve your credibility with your lender.

Lower interest rates

Are our credit card balances and interest rates sky high?

Debt consolidation is one of the most popular reasons to obtain a personal loan. A personal loan can help you pay your debt faster through combining all of your existing debt into one loan. This means that you can make one monthly payment through a lower interest rate offered by a personal loan, in place of multiple monthly payments and interest rates on credit cards. This makes your loans easier to pay off, provides you with an allocated time frame to repay the loan and could save you a lot of money in interest.

Improve your credit rating

Are you falling behind on your credit card repayments?

Your credit rating contains details of any involvement you have had with applying for credit, and is used by providers to assess your ability to repay a loan. It’s the first and most important assessment that mortgage lenders use when deciding whether they will offer you finance, how much they will provide and at what terms. Having an overdrawn bank account and missing credit card repayments negatively impact your credit rating and may impact your ability to obtain a mortgage or other large loan in the future. However, a record of conservative borrowing and scheduled repayments can help to improve your credit score. If you are going to fall behind in a credit repayment, obtaining a personal loan to fund the payment will protect your credit rating.

No security needed

Have you been refused other loans because you don’t have adequate security?

As personal loans don’t need any security, your assets are safe. This comparatively makes personal loans less risky for the borrower, as if you were unable to repay your loan under other loan agreements your security would be forfeited. This means that even if you down own any substantial assets such as a home or car, you may still be able to receive a personal loan.

With so many substantial benefits, a personal loan is often the best avenue available for those who are seeking a quick and flexible loan. When you are ready to apply for a personal loan it is important to compare lenders and quotes, so that you can find a personal loan that works for you and comes from a trusted provider.