3 Reasons Why a Private Loan is Good For You

Sometimes, it may so happen that regardless of our persistent efforts to stay out of debt, we end up borrowing loans anyway. This can happen due to many factors, but it is usually because of one thing – unforeseen expenses of contingencies that we just didn’t see coming. This can be anything – from an unexpected repair/renovation or medical emergency, to a home loan EMI or insurance premium that you forgot about. In such cases, you would obviously need extra cash to get over the financial crunch. While personal loans are always a good option you can consider, if your loan amount happens to be smaller, then you could also apply for a private loan. Many people turn to private loans to help them manage smaller debts. As it is with all loans, you should think it through before taking one out. Here are three reasons why a private loan is good for you:

1. Only One Monthly Payment

As you may know, while paying of any loan, there is a repayment schedule that is drawn up for the borrower depending upon the loan amount and repayment period in question. The usual understanding is that the smaller your loan EMI, the longer it will take for you to close the loan, and vice versa. But the good thing with private loans is that there’s only one EMI payment that needs to be paid per month, and nothing else. This is good, because you can budget the cost of the EMI along with all your other monthly expenditure. This ensures that nothing is largely affected.

2. Lower Rate of Interest

The rate of interest on a loan plays a major part in deciding how costly (or cost-effective, if you’re lucky) your loan is. Private loans are good this way, as they come with lower rates of interest than say, credit cards. However, this is still dependant on your loan provider, the terms they offer you, and your credit score. Ideally, you need to take special efforts to ensure that your private loan provider is offering you as low a rate of interest as is possible, depending on your credit report. Nobody likes to lose out on money by virtue of high interest payments, and neither should you. 

3. Clear Timeframe

Another benefit of private loans is that there is a clear timeframe of when you will clear your loan and get out of debt. As stated in the previous point, there is a repayment schedule that is drawn up with your loan EMIs clearly mentioned out per month, based upon your repayment tenure. This will only be enforced later on if you and your lender both agree to it. Therefore, as a borrower, you know when your loan is going to end, provided you make all your payments on time. Delayed or missed payments will prolong the tenure of your loan. 

Wrap Up

Anyone who takes a loan does so with the intention of getting out of debt as quickly as possible. The above three points illustrate the advantages of a private loan,, which should be considered the next time you find yourself short of funds.  

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