How Personal Loans Can Lead to Financial Freedom
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Credit card debt is a huge concern in America, with an average of $5,700 owed by the typical American which increases each month due to interest. Fortunately, merging this debt into a personal loan at a lower interest rate can give one a way out toward financial independence.
Personal loan could help you pay down your debts. A personal loan could be used for such purposes as providing money at lower interest rates than credit cards and enabling you to make payments on your debts more productively. You can even check whether you are eligible online within minutes.
What is a Personal Loan?
A personal loan is money borrowed from a bank, credit union or online lender that must be repaid over two to seven years. They provide you with the freedom because they do not specify how the funds should be utilized.
Personal loans are usually unsecured hence no collateral needed for approval. Lenders and your financial status may determine whether the interest rates are fixed or variable.
Commonly used for consolidating debts, personal loans can also finance medical bills, house repairs and remodeling projects, vacations and small businesses or weddings.
How Personal Loans Can Help You With Debt
The following are some reasons why people use personal loans towards reducing their debt:
- Combine Credit Cards: A personal loan might be helpful in paying off multiple credit cards all having large balances and high interest levels so that you pay off what you owe faster while saving on interests by paying back the personal loan at likely reduced rate of interest on fixed monthly basis.
- Re-finance Student Loans: In case where student loans attract high-interest rates and cannot be refinanced, then it’s possible that getting a personal loan will help. At reduced interest rates, it is possible to clear off student loans then return the same amount through a personal loan hence earning less in terms of interests charged upon this cash.
- Improve Your Credit: Applying for a personal loan could increase your credit ratings since it adds a new debt type to your report which is seen as a good thing. When you increase the amount of credit available, this might also lower your credit utilization percentage. Consistently making timely payments on your personal loan could help further improve your credit score.
Best Personal Loan Lenders for Debt Consolidation
To find the best personal loans, you should ask each lender whether they have good terms and interest rates. Here are some notable loan companies:
- Marcus by Goldman Sachs: You can get loans from this lender with interest ranging between 6.99% and $40,000 in size starting at $3,500. It offers some flexibility including changing the date on which one has to pay off their monthly dues and doesn’t require cosigner.
- Avant: specializes in lending money to individuals with fair or poor credits. Loans range from $2k to $35k with interest rates starting at 9.95%. This can be paid back over several months or even up to five years thus making it suitable for low monthly repayment obligations.
- SoFi: Offering loans for amounts varying from $5K-$100 K and a range of 5.99%-18.64% APRs SoFi is known for its benefits. These include an auto-pay discount, customized financial advice, unemployment insurance among others. The loan can be returned within 2-7 years
If a personal loan can help you pay off your debt, do not wait as you should consider it right away. Verify your eligibility and compare existing interest rates online. Through comparing several options for taking out a personal loan, you will be able to find the one that will fit your needs best, thereby making a significant step forward towards financial independence.
Senior Writer • Business and Information Trends Writer
Lucas writes long-form, investigative articles that explore the deeper implications of business and information advancements.
