Personal Finance

Pros and Cons of a Bank of America Personal Loan

bank-of-america-personal-loanDebt is something that almost everyone has, but few people really understand its impact. The great thing about our strong economy is that there are always places you can go in order to borrow money that you need for emergency car repairs, debt consolidation, or other needs.

There are many ways in which this can be beneficial, but there are many downsides as well. For example, the average person has tens of thousands of dollars in outstanding debt outside of their home mortgage. Many people are having trouble saving and investing for the future, or even setting up an emergency fund, because all of their monthly income is going to pay bills. In this article, the pros and cons of a Bank of America personal loan are going to be discussed as well as general personal finance tips for those that are in debt.

Bank of America Personal Loans: The Pros and Cons

A personal loan from Bank of America can help you accomplish a lot of financial goals — that’s the main “pro.” Unfortunately, since personal loans are often unsecured (having no collateral), the Bank of America usually only approves applicants who have excellent credit. Another “con” is that you can’t apply for a Bank of America personal loan online — you’ll need to call or visit a local Bank of America branch. Fortunately, this large bank has many branches across the U.S.  To find out where you can apply for a personal loan or other services from Bank of America in your area, visit their website and enter your state.

The United States and Debt

For those that live in the United States, buying things with debt is simply a way of life. The United States government has the largest debt balance sheet in the entire world, with over 17 trillion dollars currently outstanding. The average U.S. household holds quite a bit of private debt as well. When looking at the personal finances of most people, their largest and biggest asset is their home. However, many times the entire value of the home is roughly the same as the mortgage or the loan that is on the home. This essentially means that they have almost no equity in their home after closing costs in many cases.

One of the first things that people must do in order to get out of debt is to understand how much they owe and who they owe that money to. Once a person has all of their debts outlined with the repayment schedule it is much easier to formulate a plan on how to get out of debt.

How to Pay Off Debt

Although debt can useful in making a purchase before you have the cash on hand, it is important that it is eventually paid off. There are two parts to any debt repayment schedule which includes the interest and the actual principal on the loan. For high interest rate debt, the payment to pay off the debt will consist of more interest than a lower interest loan. In order to pay off the debt more quickly, it is important to make payments against the principal on the loan. Just a couple hundred dollars per month goes a long way in helping a person to get out of debt.

Borrowing Money

There are many times in life when borrowing money can actually be beneficial. For example, if a person purchases a rental property and makes money on the monthly rent, the debt is used to make more money. Or if you have very high interest credit cards, a personal loan with a lower interest rate can save you money as well as helping you get out of debt faster.

However, if a person borrows money to purchase an expensive toy like a jet ski that goes down in value, that is a bad use of debt. A Bank of America personal loan can be used for almost anything since it is an unsecured debt. At the end of the day it is up to the person borrowing the money to determine where and how to spend it. However, they should just be aware that there are consequences to their actions and their financial futures when they decide how to use the borrowed money.

Overall, debt is something that almost everyone has to struggle with in some form or fashion. However, it can be used for good in some cases. If you are getting a personal loan from a bank it would be wise to use it for something of value like a car or a home. Getting a loan to buy something that is going to quickly depreciate in value is not something that is financially wise. In order to pay off the debt faster, you should make payments against the principal on the loan and not the interest.

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