The Benefits of Getting a Personal Loan
If you're working toward improving your financial wellness, getting a personal loan can help in more ways than you may realize. When you get a personal loan, you go through a simple application process to borrow a set amount of money from a financial institution. Then, you'll pay back the loan in fixed monthly installments over a set period of time (typically 36–84 months).1
It's a useful financial tool to provide money to refinance credit card or other high-interest rate debt into a singular fixed lower rate product to free up monthly cash flows.2
Should You Get a Personal Loan?
A personal loan is a good choice for people who want to consolidate debt quickly, and don't have or want to leverage equity in their home. If you have variable rate credit card accounts that are racking up a lot of interest, you can take a lower, fixed rate personal loan,2 pay off those cards, and then make one easy monthly payment. Typically, personal loans have lower interest rates than credit cards, which can save you interest over time, in addition to freeing up monthly payments to reallocate to savings or other expenses.2
You can also use a personal loan to better manage your budget and tackle unexpected expenses. For example, if you get a car repair bill that's larger than you planned for, a personal loan can help you cover the extra cost so that your budget stays on track. It can also be an ideal solution to help you plan for a major medical procedure or significant life event.
Getting a personal loan may also be the right choice to help you make a big purchase. Breaking a large expense into smaller payments over time can help make that cost more manageable and give you peace of mind.
Benefits of Personal Loans
Not sure which type of loan to apply for? Personal loans have some advantages not covered by other loans:
- Improve your monthly cash flow by converting variable high rate credit card payments into a singular fixed rate loan payment.
- Personal loans generally have a lower interest rate than credit cards, which may help you save in total interest paid over the life of the loan.
- Flexible terms. Many personal lenders offer three- or five-year loans, while some offer terms of up to seven years. For the same amount borrowed, loans with longer terms will have lower monthly payments than shorter-term loans. Whichever term you are approved for, you’ll have a single, fixed-rate monthly payment, which can make budgeting a little less stressful.1 2
- Personal loans can be funded as quickly as same day applications.3
- Personal loans do not require any collateral or equity in your home.
The Application Process
The process of getting a personal loan is typically easier and faster than other loan types secured by some type of collateral. Applicants will be required to give the financial institution permission to check their credit history. All that the borrower needs to do is complete an application which typically requires the borrower to provide basic personal information including but not limited to:
- Name and address
- Social security number and date of birth
- Employment and income
In certain situations, additional information, like copies of recent pay stubs or tax returns may also be used. If a borrower chooses to apply with a cosigner, that person will also need to complete the same application.
And with tools such as e-sign, once a borrower is approved for a loan, they can execute the documents on their own time and they may even receive funds the same day as their date of application.3 Personal loans can offer speed and savings, making it easier to consolidate credit card debt and budget for the things you need — from that unexpected large purchase or the repair bill you weren’t prepared for.