A personal loan can go a long way in turning your financial situation around. Personal loans can help you put money down on your first car or home, or they can help you send your child to college. Loans can make medical bills disappear, and some can even be used to simply hold you over until you receive your next paycheck.
While a personal loan might seem to be the answer to all your prayers, it does not always work out that way. Loans have to be paid back, of course, and the majority of them will cost you quite a lot of money in the long run. Interest rates, even low ones, can make it difficult for you to even make headway on the payment of a loan, so within a few years you owe thousands of dollars more than you initially borrowed.
The Pros and Cons of Fixed Rate Loans
When receiving a personal loan, you will probably be faced with several options. Some loans will have adjustable rates, while others will have fixed rates. Adjustable rates are generally lower in the beginning than fixed rates. This means that you can save on monthly payments when you first start paying off the loan. However, the adjustable rate will eventually shift and your payments can skyrocket.
Fixed rate loans can offer you more security than their adjustable counterparts. Your monthly payments will generally remain the same throughout the duration of the loan, so you will know exactly how much money you need to set aside for them. Regardless of the rate, personal loans can take decades to pay off, so you need to be sure that you have the ability to take on the long-term debt, because defaulting on a loan can cause problems for the rest of your life.
How can I get a personal loan with no collateral?