How is a personal loan different from other credit?
When consolidating debt, learning about taking on an unsecured personal loan can be a lot of information to take in. Today, we want to focus on the differences personal loans have versus other credit. Here are a few differentiating factors that a personal loan carries:
- No collateral – which means you donâ€™t have to borrow against any existing assets. If you default on the loan, legal action may take place, but itâ€™s not like a HELOC where you borrow against your equity in your house.
- Possibly higher rates â€“ depending on your credit score, some interest rates from your personal loan lender could be higher than some credit cards. However, when consolidating debt, a counterbalance to this is that you donâ€™t have to worry about varying interest rates on all of your different credit cards. Instead, youâ€™d have one predictable payment on a regular schedule.
- No revolving credit lines â€“ Getting out of debt is hard enough. Getting a personal loan that doesnâ€™t have any revolving credit lines can potentially help debt from increasing more and more. With credit cards, itâ€™s easy to pay the monthly minimum and keep spending, but that debt keeps revolving â€“ and growing. With a personal loan, there are no revolving credit lines.
- Fixed payback schedule â€“ Paying on time is an essential part of being financially responsible. In fact, if you donâ€™t, it will negatively affect your credit score. One of the benefits of a personal loan, is that there is often a fixed payback schedule â€“ meaning â€“ you pay a certain amount on a certain day within each month, or on defined intervals and you donâ€™t have to worry about whether or not your payments will be prolonged over a period of time. When you take out a personal loan, you know your payoff schedule. Stick it out and pay back with ease!
- Options to make automated payments â€“ If you donâ€™t feel like writing a check, or making a manual payment deposit, some lenders offer automated payments, which can be extremely helpful for the busy individual. If the lender offers automatic payments, you donâ€™t have to worry about missing a payment and getting a ding on your credit report. Itâ€™s a win-win!
By taking out one of our personal loans, you can make affordable monthly payments and build your credit story by making on-time payments each month. As you continue to make your payments on-time, you build your credibility and your credit history.
We offer decisions in minutes and funding as soon as the next business day to help make your debt – conquering dreams a reality. There is no time like the present to start your debt – conquering mission.
At LendingPoint we offer affordable personal loans from $2,000 to $25,000 with a fixed APR and simple interest.
We would love to help finance your debt consolidation mission. Apply today and talk with one of our representatives about making your plan a reality.