We’ve noted above the kinds of financial crises that can hit you unexpectedly and lead you to seek out a loan to get you through the financial storm. And we’ve covered the basics of what unsecured personal loans are.
Here, let’s focus a little on how this type of loan can help you through a time of financial troubles better than most other loan options:
- Fast cash when you need it. Online personal loans are “fast cash loans,” meaning you get the cash deposited in your account within one or two business days of approval. In an emergency situation, time is of the essence, making the speed of personal loans a huge factor.
- No collateral needed. Unsecured personal loans, by definition, do not require any collateral. When you’re already in a financial pinch, the last thing you want to do is use your car or other valuables as collateral.
- Low stress loan process. Just go online and fill out a few short forms with only basic, relevant personal and financial information. Approval is then generally instantaneous. You don’t need more stress when already stressed by financial straits, and unsecured personal loans are simple and easy to apply for.
- Enough time to repay. If you were only borrowing a few hundred dollars, you might opt for a payday loan and repay in full after 2 to 4 weeks. But when you need a bit more cash, you also need more time to repay – personal loans let you repay in affordable monthly installments.
- Freedom to mange your loan money. Unlike auto, home, or college loans, personal loans allow you to use the funds any way you wish with no questions asked. When dealing with the random personal expenses that come up during a financial crunch, that’s exactly the kind of spending freedom you need.
How Unsecured Personal Loans Help You Rebuild Your Damaged Credit
Besides getting you through the immediate financial crisis, unsecured personal loans also have long term benefit for your finances. They can help you rebuild damaged credit, which can help you later get approved for other loans at lower rates.
You have to mange your personal loan and loan repayment well if it’s going to bolster your credit. It’s imperative to spend the money wisely so it truly solves the problem you were in – otherwise you’ll still be struggling to make ends meet even after the loan money is all spent.
And you have to make your monthly installment payments on time every month for maximum benefit to your credit score. But lenders gauge your payments size to your income size to ensure you can afford to repay, and they typically deduct the monthly payment from your bank account automatically to ensure you don’t get hit with a late fee.
And on a practical level, the discipline of making your monthly installments on time will help you learn to budget and manage money better, which will later have positive impacts on your credit history in a wide variety of ways.
At Bonsai Finance, we help you find the unsecured personal loan and lender that best fits your needs, so you can both get through the immediate hardship and improve your financial situation down the road by bolstering your credit score.
Which is more important to you: your credit score or your immediate financial situation? Give some reasons why?