The Benefits of Getting a Loan vs Paying Cash
Some people don't like the thought of getting a loan. After all, isn't it better to pay in cash? Sometimes it is. There are plenty of benefits to paying in cash instead of getting a loan. However, loans have their benefits, too, as long as you get your loan from the right source and use that loan wisely. Just like with most things, you'll want to weigh the pros and cons in light of your personal situation. Here are some benefits that can come from getting a loan instead of paying in cash.
Build Your Credit Score
If you have limited credit or a bad credit score, getting a loan can help you build that score. In the United States, credit score can have a big impact on your financial life. With a low or nonexistent credit score, you may struggle with things like housing, credit limits, and other possibilities.
Getting a loan can help you build that score. Term loans require regularly-scheduled payments. By making your payments on time or early, you can give your credit score a boost.
Of course, this does present you with a Catch-22 situation, since having a low credit score can make it difficult for you to get a loan in the first place. However, you do have some options, which we'll go over later.
Keep Your Cash in Case of Emergencies
Maybe you technically have enough cash to make a big purchase, but you won't have much left over for the basics. Is it better to take out a loan, or should you tighten your budget and pay in cash? For some, the loan may provide the best choice. Remember, a loan lets you pay back the funds over time instead of paying in one lump sum. This way, you can keep some cash tucked away in case of an emergency.
A personal loan can provide a good option for debt consolidation. For instance, say that you want to pay down debt from multiple credit cards. The more credit cards you need to pay off, the more overwhelming the situation can become. After doing some research, you might take out a personal loan to pay off all the cards. You still have debt, of course, but now you only owe money to one entity instead of several. With this option, you can easily keep track of how much money you owe, and you may find it simpler to pay off your debt this way.
Find the Right Loan
Now, there's the matter of finding the right loan. Ideally, your lender will offer a good chance of approval and decent interest rates. For both of these things, we recommend looking into local banks, credit unions, and other small financial institutions.
Earlier, we mentioned that having a low credit score can keep you from getting a loan in the first place. If you do have a low credit score, then community banks and credit unions are your best bet. Both offer a more personalized approach to lending, so you may have a better chance of approval. Plus, credit unions are nonprofit organizations, so they can afford to take a risk without as much concern for making money.
Whatever you choose, Bundlefi can help you find what you need. Let us help you explore your best loan options.