Having choices in today’s market is always great for the consumer. There are plenty of loan choices to take care of virtually any type of problem that pops up. It’s not a matter of securing a loan but figuring out the best way to do it.
For many people, a bank loan makes the most sense. For others, they may feel like it’s smarter and better economically to get a personal loan. What are the pros and cons of these two options? At Dutton Lending, they have always been upfront with explaining the differences and letting people decide what works best for them.
What is a Personal Loan?
Personal loans are almost always unsecured, making it easier to land a quality one. Instead of putting down any type of collateral, individuals get the money they need fast. Then, they start paying it off right away.
The payback terms and interest rates might be slightly higher, but it’s all dependent on a person’s credit. Even if the interest rate is a little higher than a bank loan, it’s still going to be much better than most credit cards. That’s why many people use a personal loan as a way to get out of debt and start to pay off a credit card.
A personal loan is highly versatile, which makes it so enticing for the average user. They work for any financial pickle a person finds themselves in.
The recommendation with a personal loan is to take out the amount needed and nothing more. Unlike a credit card, where people can make minimum payments month by month, there is a set repayment plan for a personal loan. If the personal loan is not paid back in time, there are some pretty hefty fees to go along with it. People need to be pretty responsible with their finances when working with this type of loan.
What is a Bank Loan?
A bank loan is a more traditional type of loan that many people are used to when they need to get money. Because it’s a bit more traditional, it takes more time, and there’s usually collateral involved. Some people may not have a problem, but others will feel like they just don’t want to deal with the extra hassle. There’s usually an opportunity to get a better interest rate, but that’s not always the case in today’s world either.
Working with traditional financial institutions for a bank loan can be enticing in many ways. However, there are still a lot of things stuck in the past when it comes to bank loans. It takes longer to receive the money, there are a lot of fine details in the terms and conditions, and they can be stingy at times with the amount of money a person is approved for.
Is a Personal Loan the Right Choice?
A personal loan is an excellent choice for the vast majority of people. It helps with essential purchases, has a fair interest rate, and is fast to obtain. The fast loan option provided by personal loan companies like Dutton Lending helps out a lot for those in a bind needing money quickly.
Who Shouldn’t Secure a Personal Loan?
As great as a personal loan can be, they aren’t for everyone. Each person is in a different financial situation, but some should probably look elsewhere. Most fall somewhere in these two general reasons.
No Pressing Needs
Don’t take a personal loan out for a spending spree that has no need. It will cost more, create unnecessary debt, and cause more trouble than it’s worth.
It’s essential to have smart spending habits when taking out a small personal loan. Only take out an amount that has a monthly payment structure that’s manageable. Getting a personal loan isn’t like charging something small on a credit card. A loan is great to help get out of debt, not create even more for an unnecessary reason.
Poor Credit Score
Anyone with a poor credit score will have trouble securing a loan. The best thing to do is to try working on the credit score before applying in the future. It’s sometimes easier said than done, but some minor changes and commitment to paying down previous debt will significantly impact a credit score.
The interest rates can resemble a credit card for many people with poor credit fighting for personal loan eligibility. It eliminates the advantage of a personal loan in the first place.
Are All Lenders Created Equally?
Not all lenders are created equally when looking at the different bank or personal loans options. Having choices allows people to be pretty judicial of who they go with, which is never wrong.
The first thing people usually look at is the loan amount and interest rate they come back with. The higher the total and lower the interest rate, the better. No one wants to spend extra money if they don’t have to.
After looking at that, sometimes lenders will seem too good to be true. When doing the vetting process, like with any other business, makes a lot of sense. Don’t go forward with a company without researching what people have said about their experience. Reviews will tell a lot of the story, as some lenders will hit their clients with hidden fees or find other ways to make some money off them.
The best lenders like Dutton Lending, for example, simply have nothing to hide. They are ready to help out their customers and answer any questions that may pop out. They are responding all the time, and they offer a variety of solutions for all types of people. Nobody has the same financial situation as the next person, so having a bit of flexibility helps over time.
What Makes Dutton Lending Different?
Dutton Lending is a personal loan company that offers specialized options for all needs. They take applicants online and expedite the process, so funds are in a person’s bank account in days.
Final Words on Personal and Bank Loans
Nobody wants to take out any type of loan in an ideal world if they don’t have to. It eventually has to be paid back, and even a tiny interest rate makes it more expensive in the long run. However, a personal loan serves as a smart choice for those in need. Starting the application process is easier and faster than ever.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.