There may be a point in your life where you need to borrow money. Maybe you’ve made a few medical bills; Lost your job; or your car decided to stop working and the cost of repairs was astronomical.
When it comes to borrowing money, the choice is yours. Lots of people can look for one quickly Credit card. But a personal loan could be a cheaper way to get credit. Read on to find out more about it personal loans and when to get one.
One email a day could save you thousands
Tips and tricks from the experts delivered direct to your inbox that can help you save thousands of dollars. Register now for free access to our Personal Finance Boot Camp.
By submitting your email address, you consent to us sending you money tips along with products and services that we think may interest you. You can unsubscribe at any time. Please read our Data protection and Terms & amp; conditions.
What is a personal loan?
With a personal loan, you can borrow money for any reason. It may be:
Personal loans are unsecured, which means that unlike mortgages and auto loans, they are not tied to any particular asset. To qualify for a personal loan, you usually need a decent credit score. There is Personal loans for fair loansbut these usually come with higher interest rates.
For more information, see our guide to learning This is how personal loans work.
Are You Saving Money By Borrowing With A Personal Loan?
A personal loan might be the most cost-effective way to borrow from an interest rate standpoint. But to find out if it does, you need to ask yourself these questions:
1. How much do I want to borrow?
Personal loans are usually associated with a minimum loan amount. In some cases, the lowest amount you can borrow can only be $ 1,000 or $ 2,000, but in other cases it can be higher – more like $ 5,000. If you only need to borrow a few hundred dollars, a personal loan may not be a good solution to saving money as you may find yourself taking out a larger loan balance than you actually need.
2. What interest rate am I entitled to?
As mentioned earlier, the higher your credit score, the more likely it is that you will qualify for one good interest rate on a personal loan. To make sure that you are getting the best interest rate, look for a loan and see what offers you can get.
3. Can I qualify for a 0% APR credit card instead?
Personal loans usually charge less interest than credit cards, but there is one exception. If you are able to a. to secure 0% APR credit card with a long introductory period, this could be your cheaper loan option.
Just make sure you can settle your balance by the end of your introductory phase. If you don’t, you will be hit with one right away Credit card interest rate that can be very high. However, if you qualify for one of these cards and believe that you can pay off your loan relatively quickly, a personal loan may not be your best option.
A personal loan could save you money the next time you take out a loan – but that’s not always the case. Before you apply, go through these questions to make sure you are taking the right step.