Personal Loans Are Not Permanent Fixes For Money Issues

Written by: Seth Rogers
07/29/2019

money-issues

Sometimes during the lifetime of the average person, they will need to take out a personal loan for various reasons. Many people live their lives from paycheck to paycheck, and find that taking advantage of a personal loan is the only way to help make ends meet. Usually taking out a loan only gives a person one more bill to maneuver money from the budget. Although many people find it almost impossible to live on a budget, they find it even more difficult to run short of money in the middle of the month before all of the bills are paid. Then there are some people who will do almost everything within their power to avoid getting a personal loan. Getting loans will take care of immediate travesties when they occur, but the real problem comes when it is time to make the monthly payments on the loan. For people whose income will barely cover the existing expenses, a loan will only add more of a hardship. It will be beneficial to take the time and prepare a budget before borrowing money so that the impact of having another bill to pay will not be too overwhelming. Once this is done, the person will be more comfortable repaying the extra money, and may not struggle to do so.

What is a personal loan?

A personal loan is a consumer loan that is given to an individual for personal, family, medical, education, household needs or purchases, or repairs to the home or car. These loans are either obtained as an unsecured loan, a loan with a co-signer, or one where an asset purchase is used as the collateral. The repayment is calculated over a period of time, and most unsecured loans are based on the individual’s credit rating, and their ability to repay the loan. The installment payments, and the terms of the loan, are fixed. Many people find that an personal loan, sometimes called a consumer loan, is beneficial for family emergencies, and for repairing broken appliances or fixtures that go out without warning. This is a common loan that the majority of people have taken advantage of because of the simplicity of obtaining it. There is no long wait period to get a final answer on whether or not the loan has been granted. If applying in person to a loan company, the results can be had the same day. Personal loans applied for online usually takes from 24 to 48 hours before the money can be dispersed.

Choosing the payday loan option

Payday loans are high cost loans from $500.00 or less that has extremely high interest rates. The money is loaned regardless of whether the credit is good or bad, and is generally due for repayment on the next pay day. These types of loans can cause great hardships on families who have limited income. Paying back a large lump sum can put a budget in dire straits. Because of this payment, something will have to go lacking. States set limits on payday loan amounts, but some can run above or below $500.00. Before taking out a payday loan, a person should really examine themselves by asking what difficulty will they have to endure in order to have this loan, and pay it back. If the money is not easy to come by initially, then it will be just as difficult to come by when it is time to repay. The state regulations have set limited fee amounts on payday loans that may range from $10.00 to $30.00 for each $100.00 borrowed. The fees and the interest rates are not the same.

The installment loan

Installment loans are basically loans that are given, with good credit rating. and the individual agrees to pay a fixed amount over a period of time. As with the personal loan, the time schedule and term of the loan are determined according to the amount of the loan, and the number of months or years it will take to pay off the loan. A few months before deciding to take the installment loan, it is a good idea to keep check on the credit score because it is a crucial part of the loan process. It generally can not be obtained with no credit, or bad credit as with a personal loan. People are opting to rush into a loan without giving it much thought, then they find themselves in a situation where they are working to pay the loan, and are still financially strapped. Instant loans, personal loans, payday loan, and the rest are all quick fixes, but sometimes they can help families realize that they need to do more about sustaining their finance. The payday loan, and some installment loans can be a vicious circle of paying money just to have the same payment to make again, and again.

Some people live their lives taking out one personal loan after another until they are bombarded with payments that they can not afford. Many people file for bankruptcy because they have over extended themselves when it came to getting loans. What seems to have been a good idea at first soon turned out to be a huge financial mistake. Personal loans were designed to help out in times of necessity. They are not for living from one month to the next paying off a loan just to renew it again to pay other bills. This can be the source of stress, depression, and anxiety. The health and quality of life can be affected by having too many bills that are difficult to pay. Be smart about personal loans, and use them when it is absolutely necessary, but make sure that they can be repaid without worry, or headache. 


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