A personal loan is an answer to most of our needs when there is a fund deficit. Being trapped in a spider web situation of several credit pay, personal loans come to play a crucial role. Having said that personal loan is a great way to improve one’s credit score by paying interest on time. Considering that personal loans are needed within a short span, they don’t require any collateral as security which makes it a good go. In fact, personal loans are offered at fixed interest rates making it more convenient and hassle-free for the customer to payback and budget.

For all those rainy days, a personal loan is a perfect tool to borrow money. Personal loans or best called as unsecured loans is a sign of a healthy economic state of affair. Since it features lock-in period and connected to the individual checking account, there is no way one can default, making it more reliable. In short, both the banks and borrower are on the same note. Usually, a personal loan is a small amount than a regular home loan kind which in a way negates paying through credit card. In today’s economic slew of debts and payments, many organizations are emerging as promising lenders with decent interest rates.

So, what makes personal loans an attractive option? One of the key reasons that stand apart is combining several debts into one at a fixated interest rate. The finite term of five years provides low-interest rate making it a more a sustainable one. If not buying a new house, this financing option is a great way to remodel the existing one. This option is ideal for short-term requirements yet current such as moving expenses, holidaying and for buying furniture. Many also consider the personal loan as a definite for paying medical expenses. In a nutshell, personal loans are a craze as the culture of saving isn’t much there or so to say not organized.

Personal loans are offered by small to big banks and credit unions without any pre-requirements at a fixed interest rate. However, there is a flip side to such financing which is both risky for banks and customers. The whole process is the basis of the consumer track record, credit score and credit history. Essentially the approval of a personal loan drills down to one’s past credit payment history. In recent days, insurance product firms are also offering personal loans at a much lower annual percentage rates. All said and done; personal loans can to be a trick if not carefully and wisely chosen. Since it’s an easy go, end consumers can get carried away and may end up in a financial crisis. This should be the last alternative if funds required. It is crucial to do a due diligence of one’s financial capacity before opting for a personal loan.

Listed below are some of the best financial institutions that offer personal loans that one may consider:

• Lending club: This major peer-to-peer lender firm offers loans up to $40,000.
• Wells Fargo: Offers competitive rates with a huge branch network
• Prosper: Provides multiple repayment term with lenient criteria’s
• New Credit America: Offers discounted loans at a fixed rate and term
• LoanMe: Provides personal loans within few hours
• Cashcall: Offers personal loans online in a more streamline fashion
• OneMain
• NetCredit: Reliable transparent process
• AmOne: Offers instant access to personal loans
• AVANT
• First Franklin Financial: Provides short-term personal loans

Personal loans also add to the overall economic growth of a nation with lenders earning interest and improved financial capacity of borrowers promoting consumerism and capitalism. Since personal loans need no security, interest rates are a bit higher but nothing much in compared to credit cards. Personal loans are far more structured, sustainable in terms of financial benefits then the interchanging fees of credit cards. Also, the overall experience of personal loans process is far easier regardless of the financial reason. In recent years, technology has played a significant role in scaling up bank operations with excellent platforms providing better digital/mobile experience. Essentially this calls for understanding the five C’s before applying for personal loans. Credit history, Capacity to repay back the amount with interest, Collateral in case of secured loans, Capital including assets and investments as a backup for payment and Conditions to tailor the loan per the consumer requirements are the five C’s that both the lender and borrower need to understand before going ahead. Consumers should not ignore the fine print in loan documents as it can create unpleasant situations.

Empowering one with financial knowledge will help to decide if a personal loan is a requirement in actual or not. In a nutshell personal loans are a good take as long as you can pay the minimum monthly installments on time and structure your financial debt.