In recent years, the number of Americans taking out personal loans has risen. The number went up to 27.34 million by 2015, which is a rise of 18% since 2013. This stimulated market for consumer loans may be a good sign in terms of Americans rebuilding credit and increased economic growth in the future. It is understandable that many Americans may be nervous about gathering more debt, even for emergencies and important life events. However, there are several pros to taking out a personal loan as well as financial resources that can help to do so in a smart way.
Personal Loans: Regular Monthly Installments
For people with mounting credit-card debt, a personal loan could help to get lower monthly payments. There is an astounding number of people in America that are living paycheck to paycheck and using a credit card can seem like the only option at times. Credit cards can often have high-interest rates and late or negligent payments can damage credit scores. With a personal loan, people can pay down their credit card debt and pay back the loan in lower monthly installments with lower interest rates.
Personal Loans: Credit Saver
Personal loans, like any kind of loan, can cause more damage to credit or rack up more debt if proper research and planning aren’t done. It is possible to get a personal loan to pay off other debt and therefore consolidating the debt into one personal loan with a lower interest rate. This goes for credit-card debt as well, which can significantly damage a person’s credit score. With proper financial guidance and steady payments, this method can help to avoid late credit-card payments as well as retaining a decent credit score for the future.
Personal Loans: Easy to Use Online Resources
Taking out a loan can seem daunting, but there are now many different resources available to those seeking a personal loan. Some financial companies have online platforms that allow customers to make payments, transactions, and to get answers from qualified financial advisors through an easy-to-use online system. Don Gayhardt, President, and CEO of CURO Financial Technologies is a financial expert, working to make personal loans accessible to people from all backgrounds with new and easily-manageable technology. New technology is being created every year to help people with diverse financial situations.
Personal Loans: Opportunities for the Underbanked
As of a 2015 survey, seven percent of households in the United States are listed as underbanked. Underbanked households are households in which no member of the home has an account at a bank. The numbers of unbanked households are typically higher in lower-income groups and in groups where English is not the first language. In the past, these groups have not had the resources or means to build credit or learn about how to get financial help.
The American Financial Services Association Education Foundation (AFSAEF) has started an initiative to educate underbanked groups on finance so that they can obtain good credit and take out small, personal loans. The movement’s informational booklet is called Personal Loans 101, and it provides worksheets with self-assessment questions for potential borrowers and information on how to plan for repayment. There are many websites with information and opportunities for those who were previously left with no options.
Personal Loans: Hope for a Debt-Free Future
It may sound counter-intuitive to take out loans to get rid of loans, but student-loan debt alone has the potential to destroy the future hopes of many young people in America. The bottom line is that with responsible planning, using a personal loan to consolidate student loans or to bring down credit card debt can give the borrower control over their future again. Student loan interest rates are through the roof and there are many personal loans available that can help to bring down monthly payments and interest rates for a manageable payment plan.