Personal Loan: Your Key To Holiday Shopping
Do you still have holiday shopping to do? In a perfect world you would have a money tree in your backyard, but if you don’t have a money tree, you may need some financial help to complete your shopping. If you do find yourself in need of some extra cash this holiday season, a personal loan is a great option, especially if you already have an outstanding balance on your credit-card.
Investopedia defines a personal loan (also known as a signature loan) as, “A type of personal loan offered by a financial institution that uses only the borrower’s signature and promise to pay as collateral.”
There are five key benefits to applying for a personal loan in addition to helping you place those special gifts under the tree.
You Will Know How Much Your Payments Are
A personal loan allows you to borrow a fixed amount of money. Once you are approved for a signature loan your interest rate and repayments terms are established and do not change throughout the course of the loan. This is what we call a fixed payment. Your payment will be the same every month, which lets you create a monthly budget with the repayment amount in consideration.
You Only Spend What You Borrow
With a personal loan you are only able to spend up to the amount of the loan. This can help you to not overspend for any last minute shopping trips. It also helps you create a spending budget, so you know exactly how much you can spend on each loved one. Plus, you are not required to spend the entire amount of the loan. If you have left over funds, you can always apply them to your payments.
Personal Loans Are Installment Credit
This simply means that your loan has a fixed number of payments. According to Score Info, one of the factors that determine your credit score is the amount owed on revolving accounts. You will be evaluated on how much you owe on your revolving account. Since a personal loan is classified as an installment loan it will not add to your revolving debt.
You Have A Good Idea As To When Your Debt Will Be Paid Off
Personal loans are usually a form of short-term lending. Since your personal loan will have a fixed term, you will know the exact date that you will have it paid off. Having a fixed payment and term helps you get your debt paid off and in the past.
Can Improve Your Credit Score
A personal loan can improve your credit score if you make your payments on time. By improving your credit score you will have access to better rates on future loans.
