Everyone loves to spend using their credit cards, and credit card debt can be tough to escape unless you’re financially stable. If you pay only the minimum amount each month, your money won’t be able to reach the principal balance of your debt because credit cards charge high interests.
Most people turn to their friends and family when they need money. Even if you’re not that type of person, eventually you’ll realize that you don’t have other choices but to get help from them. But, when you borrow money from your family, colleagues, and friends, it can put a strain on your relationship, especially when you’re unable to repay your debt on time.
There are a lot of options where you can borrow money. Some people borrow from their friends, and some borrow from lenders who may charge them a considerable amount of interest rate along with collateral. Given these situations, it may be time for you to consider applying for a personal loan. Here’s a list of benefits when applying for a personal loan.
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Contents
1. Personal Loan has Low-Interest Rates
If you’re looking for a personal loan, there are various financing companies such as Credit Ninja that you can choose with low-interest rates. Personal loans typically have fewer interest rates than credit cards, especially if you have excellent credit.
When you pay credit card debts by using a personal loan, you could save a particular amount of money just by the interest changes. Though always keep in mind that you need to have good credit to apply for a personal loan as it’s their way to decide if you’re qualified for the loan or not.
2. You don’t have to Worry about Obligations
Your friends and family may lend you money in times of crisis, but borrowing from them gives you a situation you can’t easily escape. Not to mention, if you owe them money, your relationship will be put to the test, and it can put you to an obligation you may want to avoid. Having debts to people you know can also put stress on yourself as you will be able to think about it night and day.
When you apply for a personal loan, you can directly pay your debt without thinking about any obligation. You can also pay the entire amount within a single payment and pay your existing loan through equated monthly installment.
3. Flexibility in Repayment Options
Personal loans offer the kind of flexibility that few other forms of credit can match. Based on the lending institution and the loan terms you choose, you can often select a repayment plan that best fits your financial situation. Some institutions might allow you to choose your loan tenure, or even provide options for repayment frequency, be it monthly, fortnightly, or weekly.
This flexibility ensures that you can align your loan repayments with your salary or income cycles. For instance, if you’re someone who receives a weekly paycheck, opting for weekly repayments might suit you best. With a plan tailored to your convenience, the chances of missing out on a payment or facing financial strain become minimal.
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4. You can Consolidate Payments
Combining all your credit card debts into one personal loan could be an excellent move. If you have multiple debts, you can apply for a personal loan and take care of it with a single payment. You should know that it’s easier to concentrate on one debt than having several debts that you always find it hard to pay.
After paying all your credit card debts using a personal loan, you need to make sure that you won’t rack up your credit card balances. Avoid having debts again when you still have a loan to pay. You will never have an excellent credit on you when you just paid your debt, and you’re accumulating one again. To keep it short, before spending too much, you have to make sure if it’s a need or want.
5. You’ll Get a Fixed Loan Term
When you decide to apply for a personal loan, you should know that this type of loan has a set term for repaying them. On the other hand, credit cards are revolving credit, allowing you to spend as much as you want as long as you make the minimum payment. But, if you only make the minimum payment monthly, it’ll be hard for you to pay your credit card balance.
Paying a minimum payment monthly would take long to settle your credit card balance. Whereas, a personal loan has a monthly fixed loan term. This way, it will be easier for you to pay off your debts.
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6. It Helps You Manage High-Cost Debts
High-cost debts can always be a hindrance to your financial status. It can affect your list of budgets since you’ll be spending a considerable amount of money from your income to pay these debts. However, applying for a personal loan can help you by paying all your high-costs debts in a single payment.
The good thing about paying personal loans is that when you’re done paying all your debts using your loan, you can now pay it through equated monthly installment. This way, it would be easier for you to budget your money while paying for your loan monthly.
Takeaway
Applying for a personal loan to pay off your debt could be an efficient way to save money over time. However, before spending too much and deciding to borrow money, you have to make sure that you can pay it on time. You don’t want to live your life full of debt. If you ever decided to apply for a personal loan, make sure to work with a reputable and trusted lender.
