There are many reasons when getting a personal loan may be a better than allowing your financial crisis to spiral out of control. In other situations, personal loans are rarely a good choice. When and whether we take personal loans is dependent on many factors.
Personal loans are far more expensive than home equity loans. But there’s one advantage of personal loans that is not often discussed: they’re ultimately less risky. Unlike home loans or car loans, personal loans are not usually secured – meaning there is usually no collateral for the lender to seize if you default.
If you are in a financial crisis now, you have to keep in mind the possibility that your troubles may be compounded by another financial crisis in the future. In short, if your finances get worse and you can’t pay back your personal loan, at least no one will auction off your house.
If you walk into a bank and ask for a personal loan, they may push you towards a credit card instead. But personal loans are probably better for you, precisely because on average you will end up paying less to the bank. Do your research and stand your ground if pressured to apply for a credit card instead of a personal loan. After all, it is your money.
If you have a bad credit history, you will have a hard time getting a personal loan at a competitive interest rate. Of course, having had trouble with credit in the past may be a particularly good reason to avoid personal loans in the first place.
In the end, the best advice about personals might be not to get one unless you absolutely have no other choice except credit cards. If a personal loan really is your best financial option, make sure to follow all the tips above when researching where to go.
If you need a quick financial assessment, or a housing loan assessment report, or anything property-related, please call me.
Raymond Chong
#YourInterestIsCentral
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