Borrowing from friends has always been an easy option for getting extra cash if you are in need of it. However, personal loans are now becoming increasingly popular as they can offer a number of advantages over other types of credit.
If you find yourself in a tricky financial situation, it is wise to consider all your options. While your family and friends may be happy to lend you money and help you out, here are a few reasons why you should consider a personal loan instead:
1. You have more lending options available
You can get a personal loan from a bank, credit union, online lender, or instant loan app. This gives you a wide range of options to select from and find one that suits your needs best. Depending on your eligibility, you can be certain that there are a lot of official lenders willing to lend you money. When it comes to borrowing from family or friends, you might not know for sure who would be able to offer you financial help.
2. Personal loans have clear terms and conditions
Personal loans have fixed terms and conditions such as interest rates, repayment schedules, and late fees. It is a legally binding contract which offers you a lot of clarity on what to expect as you pay off the loan. This makes budgeting for the future easier. Moreover, you have no obligation to the lender once you pay off the loan. Whereas when taking money from a personal connection, the terms of borrowing may be ambiguous. You might also feel indebted to them even after repaying the money or feel obligated to lend them money in the future.
3. Borrowing from friends can put a strain on the relationship
Borrowing money from family and friends can lead to tension. There are also risks involved If you don’t repay the loan it could strain your relationship. It’s also worth considering that if you can’t afford to repay your friends, you may have to resort to other methods of borrowing money, which could be more expensive in the long run.
4. Personal loans can help build a credit history
If you’re looking to build your credit history, a personal loan can be a great way to do it. By taking out a personal loan from a loan app and making your payments on time, you can start to establish a good credit history. This can help you qualify for better rates on future loans and lines of credit. Borrowing money from family or friends does not offer the same advantage.
5. You can use the borrowed funds for any purpose
Personal loans can be used for a variety of purposes, including consolidating debt, funding a major purchase, or making home improvements. This flexibility makes personal loans a versatile option for borrowers. You are also not required to tell the lender where you are spending the borrowed amount.
While borrowing from friends, you may feel more obliged to let them know where and how you are spending the cash borrowed from them.
6. You can borrow the exact amount you need from one lender
If you are in need of a large sum of money, applying for an instant loan makes more sense. With a personal loan, you know that lender that is capable of offering the exact amount of cash you need. When borrowing from friends, they might not be able or willing to lend you a large sum and you might end up borrowing from multiple people, which further complicates your financial matters.
You can also apply for an instant credit line so that you’ll only pay interest on the funds you actually use, making it a more efficient way to access credit.
So, which is the better option? It depends on your individual situation. But it is wise to remember the advantages of personal loans. Especially with instant loan apps, you can apply for a loan and get the cash within days. Most instant personal loans have reasonable interest rates and flexible repayment schedules for your convenience.
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