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Advantages of a Personal Loan Over Other Loans

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A personal loan can be an affordable option when you need some extra money. Of all the types of loans you can get, personal loans are the most flexible and often less expensive than credit cards. They can help you pay for homes repairs, unexpected expenses like medical bills, or even pay down debt or take a vacation.

Also, there are no restrictions on how you spend the money, and all you have to do is pay it back with interest on time. So what could you use a personal loan for?

What are your loan options? 

There are all types of loans that you can use to help you pay for day-to-day living. These include car loans, mortgages, credit cards, and student loans. Of course, they also include personal loans.

Personal loans

A personal loan can be secured or unsecured. A secured personal loan is backed by collateral, like your savings account or a car or your home.

On the other hand, an unsecured personal loan is backed by your signed promise to pay. It's also called a signature loan. These unsecured loans can be more expensive and require good credit because the lender is taking more risk. However, if you have excellent credit, you can get a better interest rate and a wide range of repayment plans.

Drawbacks of other loan products

Other loan products are often created for a specific purpose, like a student loan or home mortgage. Or they require collateral, like a mortgage or a home equity line of credit. For example, you can spend student loan proceeds only on defined educational expenses, and a home mortgage only to buy a home.

Moreover, when you get a mortgage, you're literally putting your house on the line for that debt. In other words, most other kinds of debt require collateral you may be reluctant to put up, limit the use of the funds, or both. Credit cards, of course, are infinitely flexible, but are usually more expensive than a personal loan.

How can you use a personal loan? 

Unlike with student loans and mortgages, you can use a personal loan for just about anything.

Debt consolidation
You may have other debt, especially if it has a higher interest rate, you'd like to consolidate and pay off. A personal loan will let you do that, likely at a lower overall cost. Of course, lower interest rates are never guaranteed, but debt consolidation and payoff are always a good thing.

Special life events
Do you have upcoming wedding expenses, a trip, home repairs or something else? We all have expected and unexpected major expenses from time to time.

They can be happy expenses like weddings, honeymoons and vacations. Or, they can involve a new roof, a new transmission or medical bills. Either way, a personal loan can help you cover them without high-interest credit cards.

Advantages of a personal loan
  • Less expensive than credit cards. Personal loans generally have lower rates than a credit card and often different loan types as well. When you have a big expense coming up, a personal loan can help you cover it immediately. Then, you can pay the loan back over time at a relatively low interest rate.
  • Fixed interest rates. Another helpful feature of a personal loan is a fixed interest rate. Credit card rates, usually based on the prime rate plus, can change with the market. With a personal loan, you know what your payments will be for the life of the loan.
Personal loans from Power Financial Credit Union

When you need financing for special projects and important life moments, turn to your family at Power Financial Credit Union.
  • Pay interest only on the amount borrowed. Power Financial Credit Union offers a flexible personal line of credit with a fixed interest rate that is lower than a credit card rate. The line of credit assures you that the money will be there for an emergency or for fun. However, you pay interest only on any draw you make against the line.
  • Get a fixed interest rate with a stable monthly payment. Your Power Financial Credit Union signature loan or secured loan will give you low rates and up to 60 months to pay. The rate will stay the same and so you can budget for a stable monthly payment.
Visit one of our Power Financial Credit Union locations and we will help you with personal loan or line of credit today. You never know what will come up!