Personal Loan Low Interest

Consolidating Debt by Applying for a New Loan

Being struck in a debt-trap with your credit cards can be quite tough. Imagine having 5 credit card accounts outstanding with varying degrees of interest and different due dates. The best thing that can give you relief apart from having the ability to pay all of them is to go for debt consolidation of personal loans. With this, you do not have to bother about different interest rates because you will be collating all balances into one and they will be paid through the personal loan

It can be tough to get access to a financial source to pay off your debts if you have a low credit source. You have to find a loan for which you will be paying less interest compared to the one that you are paying now. Debt consolidation is a payment plan which helps you get relieved off your financial obligations to these credit cards or other forms of unsecured debt.

The interest rate on a personal loan should be lower than on most credit cards.
Personal loan repayment can be spread over a period of time, which can be between one to seven years. Secondly personal loans do not keep revolving and there are no atrocious amounts of late payment, over-the-limit fees.

Personal loans come at a fixed interest and they are for a fixed term. That is one big advantage they have over credit cards, you do not have to face the problem of inflating interest rates. They can be used for numerous reasons, one of the most important and relevant reasons being debt consolidation. As the CEO of a famous personal loan company puts it, “In recent times, people have been taking personal loans for debt consolidation”
Popular websites of banks like Wells Fargo even show how long it can take a person to be debt-free through their calculators. These sites have information on how to control their budget and how they could do cost-cutting, debt consolidation etc.

It is not just banks and credit unions that offer personal loans for debt consolidation, even companies selling insurance are doing so. For instance, take the example of USAA, which offers insurance products to military personnel and their families; even they offer personal loan with a tenure up to 48 months with an APR of just 12 percent if they have a good credit history.

Even credit card companies are offer personal loans, which comes as a neat surprise. May be they are going for diversification or looking for means to retrieve their money. Interest rates for personal loans can vary from 7.99 percent to 19 percent depending on the credit risk.

Discover recently offered personal loans up to $25,000 and gave the consumers the liberty to choose the amount they would like to ipay every months and also choose the period of the loan. Capital One is also ramping up is personal loans, giving them at 10.40 to 17.95 rates with loan tenure period stretching from 2 to 7 years. Overall, when it comes to personal loan offers from credit card companies, Citibank leads with 20 percent share in the market, followed by Discover which holds about 14.5 percent share.

A 36 month personal loan offered by banks has an average annual percentage interest of 13.8 percent while credit unions offer them at 12.1 percent. A bank’s average persona loan is $8200 with an average interest rate between 14 and 16 percent. People are in support of personal loan for debt consolidation and many other uses, because it is fixed and disciplined.

Peer to Peer Lending Benefits, More Than Cash Advances

Cash advances and peer to peer lending are two of the most popular forms of lending for the borrower who needs money for short-term needs. Though P2P lending is a relatively new concept, it has found more acceptance because this form of lending is more humane and structured.

Peer to peer lending’s origination dates back to the 70s actually when Muhammad Yunus of Bangladesh started the concept of microfinancing. These small banks would lend just $10 to $20 to impoverished people, helping them establishing their own business. The Grameen Bank that he started lent nearly $6 billion to six million borrowers, freeing them from economic crisis. No wonder, both Yunus and his Grameen Bank won a Nobel Prize for this effort in 2006. This concept of microfinance has given shape to peer to peer lending in today’s times. Microfinance would help poor people benefit from small loans, pooled by rich people but peer to peer lending gives bigger amount loans to individuals

In the past three decades, this system has grown across the world and the concept of using social media to help many people benefit from money in their times of need has cut across all classes of society. In these times of economic crisis, there is always a shortfall of funds at some time or the other, which can be met through peer to peer lending.

There is another concept of short term lending called cash advance which can be quite helpful too but they are not as people friendly as peer to peer lending for many reason. For one, the interest rate charged by peer to peer lending is quite low compared to cash advances or even other forms of conventional lending. Also the repayment term of peer to peer lending is more compared to cash advances, you are not bound by the fact that you have to pay back the money by the next pay check, you can even extend it to five years, subject to certain conditions. The rate of interest is mostly fixed in peer to peer lending; there is no risk of the interest rate fluctuating in future, which makes this a safe alternative for the borrower.

Peer to peer lending is more personal and customized, the lenders get to hear your side of the story, they are sensitive to your needs, and there is an interpersonal interaction which is missing in cash advances. You do not have to provide too much documentation in peer to peer lending and there is no middle man involved like a bank or commercial institution, the money comes directly to your bank account. Due to all of these reasons, peer to peer lending is considered more advantageous compared to cash advances.

Personal Loan Low Interest