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Should You Consider a Personal Loan?

Should You Consider a Personal Loan?

Many people around the country who are facing some kind of financial urgency always ask themselves is they should apply for a personal loan in order to solve their problems.

For example, let’s say you wanted to get a new vehicle, be it a car, a van or even a truck for a starting business. For many people a personal loan looks like the perfect option to take advantage of this opportunity. However, when the moment to choose a credit option comes, most uninformed customers will usually opt for car financing options, and will take them from the very same car dealers where they are buying their vehicle. But in fact, the only advantage of these deals is that funds are released quickly. However, if you were to choose a personal loan to finance your vehicle purchase, the option would allow you more flexibility and better options.

Let’s take a closer look at why a personal loan can be a far better option for financing your future car purchase.

Personal loans are a financial instrument where a personal lender or a financial institution (like a bank) grant someone a set amount of money upon reviewing and approval of a series of requirements. Once the loan has been granted, you (the one who received the personal loan) are free to make use of those funds in any way you like, including a car purchase of course. Compare this to car loans or similar options, where you are only allowed to use the funds granted for a car purchase, and even sometimes only at a particular car dealer. This definitely adds value using a personal loan.

There is also the matter of applying for a secured or unsecured loan. With an unsecured personal loan from banks and similar financial entities, these tend to charge a quite higher interest rate, since they have no way to be safe against any loss or if you default on your payments. On the other hand, a car loan from the dealer is a secured loan, since the very car you are getting is serving as “guarantee”. What this means is that if you default on your payments, your car dealer can take ownership of your new car.

Of course, in the end you are free to choose the type of loan that you feel more comfortable with. But it is always better to make an informed decision and know how much personal loans can offer in this respect.

Now, what if you would like to buy an older vehicle? The problem with oder cars and vans is that financing is usually not available for them, mainly because they have already lost some value over time and bank or other financial entities are not too enthusiastic about them. This is another place where personal loans shine: since you have complete control over how to spend your money, you are free to buy that used car or van with a simple personal loan.

What makes personal loans even more flexible os that if you happen to have another asset against which to secure your personal loan, then it will be quite easy for you to be approved for it, thus letting you benefit from a far lower interest rate.