The Benefits of Obtaining a Personal Loan
Personal loans can be useful in a variety of situations. Whether you’re facing a costly emergency or a dwindling bank account, there may come a time when you need to borrow money.
But the right personal loan can do more than just cover unexpected bills. Used wisely, it can be a helpful financial tool. Keep reading to learn about the benefits of getting a personal loan.
What is a personal loan?
Personal loans provide a borrower with a lump sum of money from a lender. The number of payments needed to repay the loan depends on the borrowed amount and payment terms. Small-dollar loans – usually a few hundred dollars or less – tend to be paid back all at one time. Larger loan amounts might have a repayment term spanning a few weeks, months, or years.
Why are personal loans popular?
Borrowers choose personal loans for several reasons. For example, personal loans typically offer:
- Easy applications. Some applications take just minutes to complete.
- Quick approval decisions: Depending on the loan type, you might know instantly if you’ve been approved.
- Quick funding. Once approved, you’ll have access to your money quickly. You may receive it as soon as the same day, or the next business day.
- Flexible credit requirements. Many lenders have lenient credit requirements for borrowers with poor or even bad credit.
- Many lenders to choose from. Both traditional and alternative lending institutions offer personal loans, so chances are there’s a lender who can work with you.
Because there’s a wide range of lenders and loan products available, personal loans can be a good solution for various financial needs.
Types of personal loans
There are many different types of financing that fall into the personal loan category. Some common kinds of personal loans include:
Secured personal loans
Secured loans require a borrower to have collateral, such as a car, house, or other asset. Collateral reduces the risk to the lender and also motivates the borrower to repay the loan. Otherwise, the lender gets to keep the collateral. Pawn shop loans are one of the most common types of secured financing.
Unsecured personal loans
Unsecured loans don’t require collateral from a borrower. Because they’re riskier for the lender, they can have higher interest rates and payment amounts than secured loans. Payday Loans or Cash Advances fall into this category. Installment Loans can also be unsecured loans.
Debt consolidation loans
Debt consolidation loans combine multiple loans into one, which can allow a borrower to pay off their debt faster. The borrower can potentially save money by paying off a single loan versus paying off each loan individually.
Co-signed loans require someone in good financial standing to co-sign, or vouch, for a borrower who might have a low credit score or hasn’t built a credit history yet. If the borrower doesn’t repay the loan, then the co-signer is held financially responsible for the loan.
These types of personal loans have different requirements to qualify, and each has specific pros and cons for the borrower to be aware of.
What are the benefits of obtaining a personal loan?
Personal loans can be beneficial to borrowers in several ways. The right personal loan can:
Keep financial emergencies from turning into bigger problems
Small-dollar loans can help pay for emergencies like medical or vet bills, car repairs, home repairs, appliance service calls, or higher-than-anticipated bills. Personal loans can cover expenses like these before they escalate into situations that could create additional financial hardships.
Allow you to make major purchases
You can use personal loans to help pay for upcoming large purchases that would otherwise take a long time to save money for. These expenses can include weddings, vacations, education or professional training, or home improvement projects. You could even use a personal loan to start a business.
While we’d ideally like to pay cash for these things, it’s not always practical. Using loans as part of your financial planning and budgeting can put your dreams within reach.
Allow you to pay off debt faster
Using a personal loan to pay off multiple debts can help you get out of debt faster and save you money in the long run.
Help you rebuild credit
If a lender reports loan information to the three major credit bureaus, this can be good news for borrowers with bad credit. Paying your loan on time can repair or improve your credit score by building a positive payment history for your credit report. Even if your lender doesn’t report payment information to the credit bureaus, making loan payments on time helps build healthy financial habits for the future.
How to get a personal loan
To apply for a personal loan, follow these simple steps:
1. Find a lender
Research lenders offering loans to borrowers in your credit score range. If you have bad credit, look for lenders that mention working with borrowers of all credit types. Take time to read the lender’s Google reviews and look for them on Trustpilot to see their customer ratings and reviews. An overwhelming number of positive reviews and an overall high rating can be a good sign.
Advance America has been a trusted lender for over 25 years with more than 200,000 Google reviews and a 4.8-star rating on Trustpilot. We have a variety of personal loans and we don’t require you to have good credit to be approved. So don’t let credit problems discourage you from applying!
2. Gather the documents you need to apply
You’ll need to provide personal information on a loan application, so gather the necessary documents ahead of time. Depending on where you apply, you will probably need your government-issued ID, pay stubs or other proof of your income, and your bank account information.
3. Complete a loan application
Many lender websites have online loan applications you can complete on your computer or mobile device. Be sure to check your application before submitting it, as missing or incorrect information can result in delays in loan approval or funding.
4. Wait for the approval decision
After submitting your application, you should receive an approval decision quickly. You’ll often know within minutes if your loan is approved.
5. Receive your money
Once approved, you could have access to your money as soon as the same day you apply, or on the morning of the next business day.
Is a personal loan a good option for me?
There are personal loans designed to fit different credit scores, incomes, and financial situations. With so many options, there’s a good chance of finding a loan that meets your needs and budget.
Apply for a personal loan from Advance America
At Advance America, we offer a variety of personal loan options including Payday Loans, Installment Loans, and Lines of Credit. We work with borrowers from all credit backgrounds, so you don’t need great credit to be approved.
Ready to find a personal loan that’s right for you? Visit us online and apply today.