Here’s Why You Should Consider A Personal Loan

There are a lot of reasons to consider a personal loan for commercial or personal purposes. A lot of people have an affinity for personal loans over conventional alternatives because of the ease in its application and flexibility in its repayment terms.

Also, personal loans tend to have longer repayment terms. The repayment period can usually last up to five to six years, but of course, that depends on certain factors like how responsible you are with the repayments. Here are some reasons you need to consider as to why you should opt for a personal loan.

Debt consolidation

One of the most common reasons why people opt for personal loans is their usability for consolidating debts.

Let’s say that you have different loans, credit card debt that has different balances and due dates.

That would be a hard thing to deal with, but when you opt for a personal loan, the balances you have will be combined into one monthly payment. This will be easier to maintain since you won’t be worried about the timeframe for each balance.

Not to mention the interest. Personal loans tend to have lower interest than other loans and credit cards. Because of this, you’re going to have a lower interest in your overall debt and longer time for repayment.

High borrowing limit

Personal loans that have a higher borrowing limit than credit card lines most of the time. Of course, the borrowing limit for the applicable person will depend on the terms of the lender. Most of them, however, tend to have a limit of $25,000 to $30,00 depending on different factors.

Improving your credit score

If your credit report mostly shows debt, opting for a personal loan might help the ‘account mix’ of your credit report. Your credit score will benefit from the account mix. Also, it may lower down your credit utilization ratio.

If you don’t know what a credit utilization ratio is, it is the credit amount that you have utilized compared to your credit limit. If your credit utilization ratio is lower than your credit limit, your credit score will improve.

With personal loans, your credit limit will increase, making your utilized credit lower than your credit limit. Because of this, your credit score will improve. If you do better with your personal loan, it will further enhance your credit score too. It’s like hitting two birds with one stone.

No need for collateral

Probably the best benefit of personal loans is that it requires no guarantee or collateral. Of course, the consequences of defaulting on a loan will be hard, but you’re not going to worry about the loss of a house, a vehicle, or anything of value.

An alternative for payday loans

Sure, payday loans are easy to apply for, not to mention its fast as you can get the money within the day of your application. But, more often than not, it can be a considerable risk, especially if you aren’t able to pay for it in time. Some payday lenders often have hidden fees and sometimes can jack up their interest as high as 400%.

Personal loans, on the other hand, are more secure and straightforward. Take CreditNinja and other personal loan lenders for example. The application is fast, reliable, and straightforward. You will also get your money the day you made your application. If you are worried about your poor credit, don’t worry as they would still let you get a loan under certain conditions.

Emergency funding

Funeral expenses are one of the things you should consider when applying for a personal loan. Funeral and burial expenses are rather expensive. They include expenditures such as burial, casket, funeral services, etc.

But, funeral expenses are just one of the things that you can consider an emergency. Other emergencies, such as medical bills, can also be included. Emergency funding needs an immediate response, and having a kind of loan that you can access anytime and has a fast service is a big help.

Lenders offer a fast service as you can get your money within the day of your application. Some lenders can fund you after two business days. After incurring the costs, you can begin to shop for lenders with immediate service to avoid having additional interest charges and also not to miss any due dates.

Low interest rate and other fees

Depending on the lender, the amount of money you have to cash out over the life of a loan can vary. But, personal loans’ interest rate and other fees are comparatively lower than that of credit cards.

For interest rates, they typically have an interest rate of 5-36%. That of course, depends on how excellent your credit score and the lender. In simpler terms, you will have a high chance of having a much lower interest rate the better your credit score and credit report. Keep this in mind, however, that the longer your repayment duration you choose, the higher the interest rate will be.

For origination fees, there are lenders that charge you for the processing. This will be 6% of your loan amount at maximum. Some lenders also charge you with prepayment penalties. This is when you pay your loan ahead of time. This is to take back the money that they would have earned if you follow the schedule.


Personal loans are versatile as they can be used for different purposes, both for financial or personal reasons. From wanting to settle your debt quickly to having a one-time big purchase, personal loans are your go-to kind of loan. They are comfortable, fast, and secure. Not to mention, they can help you if you have a poor credit score.

While personal loans can be considered a lifeline when you are in dire need of money and wanting to better your credit score, there are still some you should consider before going ahead and applying for one. Always check the terms and conditions before applying and make sure that applying for a personal loan is the best decision you can do. After all is well and done, make sure to always pay it back on time to avoid unnecessary repercussions.