Whoops, is that money belt feeling a little tight? Feeling the pinch on your wallet if you want to procure something that is usually not an everyday purchase? How can you manage your cash liquidity flow problem to compensate for the lack of funds you seem to be facing? Simple, you take out a long-term loan.
Now, it’s not as easy as it sounds and can be a complex process. Perhaps you are a bit cautious and do not want to take on such a high volume of debt. Or, you just do not know what the process entails. The first thing you need to know is that personal loans that tend to span a long period of time will give you access to immediate funds and will allow you to obtain an economical monthly repayment plan.
There is no hard and fast rule that places a time cap on the loan duration to classify it as a “long term”, but usually five years or so is the generally accepted norm in the many top loan companies. You could need it for any reason: maybe you want to buy a brand new automobile, pay your child’s college tuition fee, renovate your home or just buy a new one. Let us share a few awesome benefits that come with engaging in long term loans.
Access to Large Sum of Money
A long term loan will allow you to borrow a higher amount of money. If you are investing in an asset that will appreciate with time, such as a property, then a long term loan could be the best way to go about it as there are countless unanticipated expenses associated with the purchase of a property.
Homeowner insurance, fire insurance, security insurance, the list goes on and on. Maybe there is an unforeseen medical emergency that has risen in your family and you need access to a large pool of cash. Anything is possible. This sort of loans can also help you pay off any consolidated credit card balances and other forms of debt.
There could be happier reasons to borrow money as well: such as a wedding or honeymoon destination you want to finance without any worries. Remember that the longer your loan duration is, the lower your monthly payment will be. Notable variations in monthly payments will exist if you choose a seven year plan over a three year one.
Flexibility in Payment Schedule
Usually, there is no payment limit placed on the loan agreement that you undertake with your loan service provider. You can go beyond the monthly minimum if your wallet allows it. If there is one month where your budget allows you to afford to pay a higher amount back, then make sure you go for it!
This will lower the interest expenses that you are bearing and lower your debt as well. If £900 a month sounds doable to you on some months but not each one, then maybe take a longer loan plan out. That will give you the flexibility you need to pay additional amounts when and if possible.
And of course, you will not damage your creditworthiness if you need the extra £300 for some other activity as you will continue to make the monthly minimum requirement.
Personal Loan-not a Credit Card
Now, we do hope that you are not in the habit of racking up debt. However, given the high cost of living in today’s world, we would not be surprised if you had a high volume of credit card debt as well. Personal loans tend to be better choices than credit card sometimes. Read on to explore the reasons behind this.
Lower cost of Interest
Your bank could be giving you a mind blowing rate on your credit card scheme. But even then, interest rates associated with personal loans tend to be quite lower than those compared to credit cards. The more you pay back towards your personal loan will make your principal amount lower and you will pay off the actual debt you owe rather than incur additional interest charges.
Set Date for Payment
The minimum amount you owe on your credit card debt can be stretched out years to come. We are not messing with you, it could go up to twenty-two years or even more. If you make the smarter choice and go for a long term personal loan, your monthly payment will remain the same and you will know when you have fulfilled your debt and are truly free from its burden.
We recommend that you take out some time and study how personal loans work. Once you comprehend their dynamics, you will understand why it is a financially stronger alternative than a credit card. The latter tends to trap you in its vicious, never ending cycle of borrowing and paying. It becomes a lifelong circle as you pay some debt, get more debt, pay it off again and repeat. Even if you paid of £700, you can easily rack that up again.
Even with all the benefits of long term loans, there are still a few things to watch out for. The harsh reality is that you will remain in debt for a long period of time. Therefore, it is essential you understand the commitment you are taking on and feel comfortable in your capability to meet future payment requirements.
If your loan service provider feels that there is a higher risk, he will probably place a higher interest rate on your loan scheme. This will mean you will be paying higher interest charges. But remember you do have the flexibility to pay higher amounts in the months that are more lucrative for you financially.
That is the beauty of personal loans as it offers you a higher degree of flexibility that does not come with other forms of payment. Make sure you have a strong credit rating to obtain a good interest rate with an effective payment schedule that is not a burden for you.