Making debt work for you
We all love living in Hawaii, but it can be tough making a living in paradise. To cover the gaps in your fluctuating finances, sometimes taking out a personal loan is a smart choice.
While some believe there’s a stigma associated with borrowing money, there are many positive benefits to taking out a personal loan. Here are four reasons why taking out a personal loan can help empower you to take control of your finances.
Better for Budgeting
When expenses pile up, most tend to charge it on a credit card. But paying off monthly minimums could keep a high interest balance on your credit cards for years if you’re not careful.
With a personal loan, you get a one lump sum payment with a fixed interest rate and a predictable monthly cost. If your loan interest rate is lower than your credit card interest rate, you’ll save lots of money long-term. Plus, the predictable payments will make it easier to set a budget and manage it monthly.
Improve Your Credit Score
Your credit score is one of the most significant factors in determining your financial health. Having “good credit” can help you borrow money, secure a mortgage, and in some cases, even help you get a job. Three credit bureaus, Equifax, Experian, and TransUnion assign you a three-digit credit score ranging from 300 to 850. The higher your credit score is, the better, showing you’re a lower risk for lenders.
One of the key factors of having a good credit score is payment history. Taking out a personal loan and paying it off on time consistently will help improve your payment history and raise your credit score. But be sure you can make those payments - just as paying off your loan can help your credit score, missing payments can hurt it.
Evening Out Freelance Income
Are you one of the growing number of people who quit their traditional 9-to-5s to enter the gig economy? While you may be enjoying the freedom of freelancing or contract work, the ups and downs of a fluctuating income can be stressful. Taking out a personal loan can help alleviate and even out those dips in revenue when work is slow. It also allows gives you the flexibility to pay back your loan faster when you’re raking in the dough.
Securing a business loan may also be challenging for those expanding into contracting work or starting a small business. Applying for a personal loan for business can help you establish your business’s credit while temporarily leaning on your personal credit. For entrepreneurs and freelancers, a personal loan for business can help you manage the ups, downs, and investments you may need when you can’t rely on a steady paycheck.
Pay Less on Debt
Give yourself a little financial check-up by figuring out how many credit cards you have with outstanding balances and what interest rates you’re paying. If you’re paying off high-interest credit cards, it might make sense to consolidate into a lower-rate personal loan.
Suddenly, you’re not paying three or four credit card bills. You’re paying one monthly personal loan payment at a more competitive rate. Simplifying your credit card bills can not only save you money in the long term, but it can also alleviate some monthly stress. No more remembering which bill to pay off and when.
Of course, personal loans aren’t the right choice for everyone. Your current credit score will determine if you qualify for lower interest rates. There are also fees that you’ll have to consider, and penalties can be high if you’re late with payments. But for those with solid credit scores who want to pay off high-interest debt, a personal loan is a great option to take control of your finances.
If you’d like to talk about your options or want to learn more, visit a Central Pacific Bank branch and speak to one of our helpful loan officers.