What is a Benefit of Obtaining a Personal Loan? There’s More Than One!

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Navigate personal loans with the right information and approach

It isn’t uncommon that life throws in an unexpected bill that sends us scrambling for wiggle room in our budget. That’s when we explore our finance options and find ourselves comparing the benefits and disadvantages of our options. In this article, we answer the question: what is a benefit of obtaining a personal loan? Let’s answer this question and similar frequently asked personal loan questions. Today, we unlock insider info! 

Let’s face it, we’ve all been there. With 78% of Americans living paycheck to paycheck, it is safe to assume that financial struggles are more common that we know. That is why loan options are available because there’s a need for such services. However, it’s important to us that you know everything there is to know about personal loans before you apply for one.  

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Being informed is very important when making financial decisions. So, let’s get started, and take an inside look at personal loans!

What is a personal loan?

First, let’s explain what a personal loan is. In simple terms, a personal loan is a loan that can be used to cover a wide range of expenses and it needs to be repaid over time. The term “personal loans” is a bit of an umbrella term for several different types of loans that can be used to cover personal expenses or needs.  

It is interesting to note that the highest personal loan balances are carried by borrowers in Washington, Oregon, North Dakota, Wyoming, and Montana. Also, baby boomers have the highest personal loan debt while Gen Z has the lowest. Here’s a few more personal loan statistics we think are important to know.

Graphic bears the headline – personal loan statistics and lists out several personal loan statistics with imagery and icons. These personal loan statistics are listed throughout the article.

Personal loan products

There are several different types of personal loans. Here are three common types of personal loans:

1. Single-pay payday loan

A single-pay payday loan is a type of personal loan which is designed to help borrowers make ends meet in between paychecks. This short-term loan does not have credit requirements and repayment is due by the next payday. Typically, the loan amount tends to be smaller since it’s used as a quick solution.

2.  Installment loan

This type of personal loan is usually a larger amount, and it is to be repaid in smaller repayments over 180 days. Each repayment is called an installment. Depending on the provider, it is possible to access an installment loan without a hard credit check.

3. Line of credit loan

Also referred to as a flex loan, this type of loan functions like a credit card. Borrowers are granted access to an approved credit limit, and they can borrow and repay without having to reapply each time. Line of credit loans act much like a credit card since they’re a type of revolving credit.

Secured and unsecured personal loans:

Personal loans can be categorized into two types based on collateral requirements. “Collateral” is a term here that means an asset or property of value that a borrower pledges to a lender as a guarantee when trying to get a loan. If a borrower is unable to repay a loan, the lender may seize the collateral. 

If the personal loan doesn’t require collateral, it’s an unsecured personal loan. That’s not to say it’s unsafe. Did you know that over 23 million American have unsecured personal loans? Unsecured personal loans can be safe. It just means the lender doesn’t have collateral, or an asset they can easily “secure” and own if the borrower defaults on the loan.  

If the personal loan requires collateral, it’s a secured personal loan.

Pros & cons of personal loans

When you’re at a crossroads regarding something, making a pros and cons list really helps. Maybe If you’re toying with the idea of a personal loan and wondering, what is a benefit of obtaining a personal loan? We want you to take in this list of upsides and downsides when considering a personal loan:

8 benefits of obtaining a personal loan5 disadvantages of a personal loan
1. Helps with emergency bills 
2. Doesn’t need collateral 
3.Enables you to afford big events/expenses 
4. Has simple and predictable payment schedules 
5. Offers flexible financing 
6. Doesn’t do hard credit checks 
7. Easy to apply and manage 
8. Can offer higher borrowing limits than some credit cards 
1. You have to meet age and location requirements to apply 
2. Not all states offer personal loans 
3. Can carry higher APR than traditional loans 
4. There may be other alternative funding options that cost less  
5.There are no guaranteed approvals

Please note that these personal loan benefits and disadvantages align with our products and services. These may not apply to all personal loan options out there.  

Depending on your situation, the pros can clearly outweigh the cons. You can apply for a personal loan even with bad or no credit. Depending on the lender, these loans may have no impact on your credit whatsoever.  

At Net Pay Advance, our personal loans do not require credit, nor do they impact your credit. They’re easy to apply online and are known for quick approvals. You can even get funds deposited directly to your account on the same day!  

When perplexed with the question of what is a benefit of obtaining a personal loan, the pros listed above should give you plenty of reasons to take out a personal loan.  

The bottom line is to work with a trusted and legit loan provider for all your financial needs. There are times when you need money, and you need it quickly. We understand that taking out a loan may not be possible for some of us, and we encourage you to look at these alternatives to get fast cash.

Personal loans – frequently asked questions (FAQs)

We have compiled a list of questions we get most often from our customers and provided answers to them. Take a look at these personal loan FAQs:

How do you calculate interest rate on a personal loan?

People with excellent credit are more likely to qualify for personal loans with lower-than-average interest rates. Those with average or poor credit may qualify for personal loans with higher interest rates. Typically, different lenders will set a standard interest rate they offer based on their audience, or the type of lender they’re wanting to work with. Like with any finance decision the average American will make, it’s important to compare options before applying for a personal loan.  

There are scores of online calculators out there that might help you pull numbers for interest rates on personal loans, but we would advise speaking with a lender for more accurate information. You can access more information on our online payday loans rates and terms.

Where to find an easy personal loan?

You can find an easy personal loan at Net Pay Advance. You can apply online, get approved, and have funds available to you on the same day!

Which type of loan can be used for debt consolidation?

A debt consolidation loan is where you use a new loan to pay off your debts and then focus on making a single payment for the loan rather than worrying about multiple payments at once. There are loans advertised as “debt consolidation” loans out there.  

Really, it depends on the loan and the interest rate. Sometimes people use unsecured personal loans, secured personal loans, or home equity loans to consolidate their debt. What matters is that the interest rate of your debt consolidation loan should be lower than the interest rate of your current debts. So, a payday loan probably isn’t the best for debt consolidation.

Can I borrow money for a down payment?

Most financial institutions do not accept personal loans as down payment. Considering that down payments can be as high as 20.4%, it is safe to assume that it amounts to a small fortune in some cases. Also, banks are likely to view a borrower as not having sufficient income to make payments on their mortgage if they’re resorting to personal loans for a down payment.

What is a good APR rate for a personal loan?

It depends on the loan type and loan length. APR (Annual Percentage Rate) isn’t a good measurement for smaller loans. This is because APR largely depends on your credit score. Short-term loans will have a higher APR than a long-term loan, regardless of the interest rate, simply because of the length of time.

What is the easiest type of loan to get with bad credit?

The easiest type of loan to get with bad credit is one you get from Net Pay Advance because we don’t consider your credit when reviewing your application. We do not conduct hard credit checks on our borrowers.

How can I get loans for 500 credit score?

It is a common misconception that you need stellar credit to apply for loans. Although some lenders might have credit score minimums borrowers are required to meet, that’s not true for Net Pay Advance. We don’t look at a person’s credit score when approving or denying them a loan. Your credit score is never a factor when you borrow from us. 

You can get a personal loan regardless of credit at Net Pay Advance. Apply here.

What is a personal loan used for?

A personal loan can be used for whatever your needs are at the time. Borrowers cite debt consolidation and home improvements as the two most popular personal loan uses. These loans can be used to cover emergency bills, pay off debts, home repairs and renovations, car repairs, and more. After facing an unexpectedly hard month, some people use personal loans to cover their everyday expenses until their next paycheck comes in.

What is a benefit of obtaining a personal loan?

We have 8 benefits of obtaining a personal loan for you.

Light blue background bears the heading: 8 benefits of obtaining a personal loan. The remaining graphic lists out these personal loan benefits as follows: pay for emergency expenses, afford big events or expenses, no collateral required, simple payment schedules. Flexible financing, no hard credit check options available, possibly higher borrowing limit than credit cards, easy to apply and manage. The Net Pay Advance logo and brand name is on the bottom-left corner while image of hands fanning out currency notes appears on the bottom-left corner.

There are several benefits of obtaining a personal loan such as being able to take care of emergency expenses without dipping into savings or paying for major life events like a once-in-a-lifetime wedding or necessary travel.

What states prohibit payday loans?

There are a few US states where payday loans are prohibited. They are Arizona, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Dakota, Vermont, West Virginia, and Washington DC.

Find out if our personal loans are available in your state:

See which loan options are available in your state

Can I get a personal loan from my phone?

Yes, you can get a personal loan from your smartphone. Several lenders provide online loan solutions. The Net Pay Advance website is compatible with mobile and tablets. We even have a cash advance app for your lending convenience!

Can Uber drivers get payday loans?

Yes, Uber drivers can get payday loans. It depends on the lender; but in fact, with Net Pay Advance, all 1099 employees and gig workers are eligible to apply for payday loans just as W2 employees are. 

Uncover the best loan options for gig workers.

How do you guarantee a personal loan?

Payday loan approvals can’t be guaranteed. Any lender claiming to offer guaranteed approvals must be treated with caution. It could be a marketing gimmick or just word play to disguise deception. Worried about being approved? Look for lenders that don’t require a hard credit check. Your credit score won’t matter, and their application won’t impact your credit.  

Is there a way to get a loan without a bank account?

Yes, there are ways to get a loan without a bank account. There are apps that only require credit card information to transfer funds.  

At Net Pay Advance though, we do require our borrowers to have an active bank account in their name. That allows us to deposit approved funds directly to the customer’s bank account.

What happens if you don’t pay back a personal loan?

Most lenders will work with borrowers to set up a payment plan. However, continuing to not pay off a loan might have other consequences. It depends on the lender, but this could include extra fees, collection attempts, calls and emails from collections, negative impact on your credit score, or sometimes even legal action.  

Luckily, Net Pay Advance is different. For starters, we offer our customers the ability to extend their due date by a couple of days for free. We don’t run hard credit checks on our customers and that’s why their credit remains unaffected. Discover what happens if you can’t pay off your personal loan at Net Pay Advance.

How does co-signing a loan work?

Co-signing a loan means that the cosigner agrees to be responsible for the borrower’s debt. If the borrower misses or defaults on payments, the cosigner is required to pay the loan. 

Please note that borrowers require co-signers only if they’re applying for loans that consider credit scores for approval. When a borrower is unable to meet credit score requirements, they might have the option to bring in a co-signer who has good or excellent credit.  

At Net Pay Advance, borrowers do not have any credit constraints and therefore do not need a co-signer.

What is the difference between a fixed-rate loan and a credit line loan?

A fixed-rate loan involves borrowing a fixed amount of money that has the same interest rate applied to every repayment. A credit line loan, aka line of credit loans, works like credit cards as you receive a set limit to withdraw from and can repay and withdraw again as needed. Usually, interest rates are variable for line of credit loans. This means that the interest rate is subject to change based on how long the borrowed funds are in your possession.

How do I know if my loan is fixed-rate?

You can determine if your loan is fixed-rate by reading the loan contract and terms. If your interest rate for the loan is the same throughout the repayment period, you have a fixed-rate loan. If your interest rate fluctuates throughout the repayment period, you have a variable-rate loan. If you’re still confused, contact your lender and they will have an answer for you.

What is an unsecured debt consolidation loan?

An unsecured debt consolidation loan is a personal loan that you use to repay other debts you currently have. It is unsecured as it doesn’t require collateral such as your home or car.

How long does it take to get a payday loan?

It depends on the lender. Many lenders only offer next-day deposit.  

At Net Pay Advance, we realize that sometimes you need cash ASAP! That’s why we’ve tailored our process to offer quick funds, sometimes as soon as the same day for customers with a valid debit card on file! Easy application, quick approval, and get funds in your account. It is that simple.

Take control of your finances today!

There is no shame in needing help sometimes. We exist to serve people who need financial help or just need a boost to get caught up with bills and expenses. We hope we were able to answer the question, what is a benefit of a personal loan? 

Finances are an integral part of life, and we aim to create a hub of information through our finance blog

Need cash? Apply today!

Anna Reeve Net Pay Advance author headshot
Anna Reeve

As someone that spent a lot of time reading as a kid, I was deeply intrigued by the written word from an early age. My first full-time job post college was writing content for high-end fashion websites. Following my graduation from the MBA program at Pittsburg State University, I found employment in Marketing. For the last couple of years, I have been creating content on several platforms. I am a proud dog-mom to my black labs – Sky & Harry Potter (took fangirling to a whole new level there!), a connoisseur of Indian cuisine, a mediocre artist, and a reality TV addict.

Net Pay Advance is a licensed loan provider, locally owned and operated in Wichita, Kansas. Our No. 1 priority is helping you, the customer, by providing access to the cash you need and helping support financial independence goals with valuable, informational, and entertaining content. Stay up-to-date on our posts by following the Net Pay Advance Facebook, Instagram, and Twitter pages. Our organization is committed to transparency; learn more about our authors and editorial policy. The information provided within this blog is for educational purposes only and should not be construed as financial or legal advice. Please contact us if you have any questions.