Personal Loans V’s Credit Cards: What You Need to Know about Them
A Golden Oldie When it comes to borrowing money your everyday personal loan is probably as straightforward as they get should you be looking to borrow some money. If you want some money for something special like a new car, home renovations or an exciting holiday, or maybe you need to consolidate a number of debts a personal loan can be an efficient economical way to do it.
These days personal loan repayments terms range anywhere from one to seven years, you make an application for a specified amount and once approved you make regular principal and interest repayments until you pay it off in full.
Not a Favourite with the Banks For quite a while now personal loans have slipped back into the shadow of the more popular credit cards. The main reason for that is credit cards are outrageously profitable for the banks and much better for their bottom lines than those stuffy old fashioned personal loans.
Per chance you shuffled your way down to your local bank to ask them for some money to do a kitchen makeover and they gave it to you via a personal loan, you would diligently make your required payments of the agreed upon loan term and the whole deal would come to a screeching halt once you’d paid all the money back.
Banks Love to give You Money on their Terms However, if the bank talked you into a credit card that had a permanent revolving line of credit attached to it, you might start getting other ideas with that ready cash just sitting there waiting to be used up. In fact, this would be the perfect time to fix the bathroom up (she’s been onto me for months about that) and what about a holiday to recuperate after all of that renovating – and the bank is going to be deliriously happy because of the very high interest rate they are going to charge you for that very convenient flexible service.
Alas, sitting there all alone by itself and neglected on the bench is your poor old cheaper personal loan.
There’s some New Kids in Town Nonetheless, there has been a change in the wind and personal loans have all of a sudden started to make a re-sounding comeback again.
How come? The power of the internet and electronic automation have made it possible for new start-up personal loan companies to enter into the lending marketplace and start offering better deals to borrowers. The advantage is it’s all automated with no costly overheads, making it a lot cheaper for them to run an operation and compete with the established lenders.
These Guys are Lean and Mean They don’t need all that regular banking stuff, you know, like expensive high rise buildings, lots of tellers and the security systems that go with that, no need for lots of staff or to be holding billions of dollars as back up capital. This means the marketplace is a now a lot more competitive, with these new enterprises offering much more competitive rates as well as small business loans and that means borrowers now have access to very competitive deals.
Banks have had it all their own way for a long time now, but the times are changing and not before time. In fact banks are starting to get a little nervous with all these new players getting into the market. Setting the pace are organisations like RateSetter and Society One who are the new online ‘no frills’ lenders who are offering consumers wide and varied options.
So, if you have been putting off borrowing some money for your pet projects or for whatever reasons weigh up the pros and cons, as it might be worth your while to go online or talk to your finance broker and check out some of these new players to see what you could be eligible for.