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There are so many benefits to taking a loan credit. Whether it is a revolving credit loan or cash advance. Personal loans will help you build a solid credit portfolio, within the shortest span of time.  Having a credit card loan can help increase your credit limit since your credit limit is directly connected to the status of your credit portfolio.  Another benefit of taking a cash advance or cash credit is that it’s processing is very fast when compared to other types of loans. There are some banks that can process personal loans, under a minute.  Personal loans are quite flexible in nature, you are not under mandatory guidelines on how to spend the money, hence such loans are preferred for diverse kinds of situations such as weddings, home renovation, vacation and business expansion.

What are the things to consider before taking personal loans?

Personal loans are highly lucrative for their flexible terms, but you still have to look at the payment terms as well as a number of other factors before you apply for one.

1. Assess the total cost

You must keep in mind that interest rates are not the only costs to consider when it comes to cards loans. You must also consider other costs such as pre-payment charges, processing fees, and penalties on default repayment. Assessing all these costs will help you in making necessary plans for spending the loans.

2. The Interest rates

Perhaps the most important costs on personal loans, are the interest rates. Fortunately, different personal loan givers do provide cash credit calculator to assist you in working out the total interest rates payable over a period of time. Personal loan interest rates may be as low as less than 11% and can be as high as 25% or more. You need to talk to your personal loan creditor to understand the nature of these rates. Interest rates can affect your monthly repayment of loans.

Fixed interest rates

The fixed interest rate is the standard rate you must pay on a credit card loan principal amount for the entire duration of the loan. Though the fixed interest rate may not apply on special card promos, it is usually calculated based on the principal loan, the interest rate and the tenure of the loan. You will pay a fixed amount of interest rates regularly, regardless of how much of your debt you have paid off.

The reducing balance interest rate

Under this type of interest rate, a part of your monthly installment payment will go towards the repayment of the principal loan, aside from the interest rate. This simply means that as you make loan repayment over a period of time, your borrowed principal loan will get lower until you pay it off.  One of the benefits of the reducing balance interest rates is that your new interest rates will be calculated based on the remaining principal loan, which means, your interest rates will also decline steadily. This interest loan perhaps is far better than the flat interest rate loan where interest rates do not get lowered.

3. Make sure you calculate your monthly installment payment

Just before you agree on personal loans such as business loans, you need to have an idea about how much monthly installment payment you will make. Make use of the cash credit calculator online to calculate your monthly installment payment in order to avoid accruing debts or some sorts of penalties. Credit card loan penalties can be a serious financial burden; hence it is important that you make your monthly repayment on time and every time.

You need to consider your current income and be impartial when judging your current loans along with interest rates and your installment repayment. You must have a specific percentage of your income going into monthly repayments, in order to avoid any penalties.

4. Consider the repayment period

Personal loan givers, including banks, usually have a fixed or standard loan repayment period for various kinds of loans. In most cases, the tenure for the repayment of most personal loans doesn’t last longer than 60 months. The length of loan repayment is usually worked out based on your capability to repay the loans. The amount of the loan is also considered when working out the length of repayment.  One of the benefits of obtaining personal loans from private lending institutions such as Asteria Lending is that you can negotiate the length of repayment, to suit your income capacity.

You need to be careful when negotiating your terms for repayment, a lower or shorter repayment tenure means, you will pay less total interests, it also means that your monthly installment payment will be higher. A longer length of loan repayment means your monthly installment repayment will be smaller but you will end up paying more interest rates.

5. Choose private lenders instead of banks

When it comes to loans, you don’t need card guides to tell you that it makes more financial sense to approach a private lender than the bank or some other financial institutions. A private lender, for instance, will consider someone with a low credit score for a cash advance, but the bank considers a moderate to high credit score for such personal loans. An individual with a bad credit history will find it difficult to obtain a cash advance from banks and if he eventually gets the loan approved, he may be asked to pay higher interest rates.

Aside from lending money to people with higher credit score, obtaining loans from a private lender such as Asteria Lender, is straightforward, unlike most bank loans that will require long and tedious verification of documents before issuing a loan. Most private lenders will approve your loan request within the same day. With a private lender offering personal loans, there will be no barrier to the cash advance you need to execute emergency projects or long-term business needs, as long as you meet the basic credit score and other primary requirements. Learn more.

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