Why a Private Loan May Be Right For You

People choose private loans for four main reasons.

It's the cheapest option. If you're planning on using your credit card, or can access a bank loan or financing, make sure you know the interest rate you'll be charged. Financing your new car at a rate of 16% is a very expensive option, and though it seems the easiest when you need the money, it may be a choice you later regret. Family and friends tend to be focused on helping you, not making a buck. In fact, most simply are expecting to get their money back; to get it back at a modest interest rate will be a pleasant surprise.

It offers flexibility. While bank and financing loans nearly always are set up on a standard amortized monthly repayment schedule, you can set up your private loan any way like - as long as your lender agrees. Try to design a repayment plan that is most affordable to you, giving you the best chance to stay on track. For example, agree to defer payments for the first 6 mos. until your financial situation stabilizes, and then begin repaying on a regular schedule. Or, you could design a loan with a seasonal schedule if your income is seasonal.

Flexibility also comes in handy during the loan. In advance of a due date, your lender can agree to reschedule the payment, move it to the end of the schedule, or forgive it entirely.

It's the only option. These days, it seems that everything comes down to your credit score. And if yours is poor, or nonexistent, your ability to access debt at a reasonable interest rate may be severely limited. Friends and family will judge your request based on their trust that you will do your best to repay. When all other doors are closed, people you know may be willing and able to help.

It can prove you are serious about building your financial life. Borrowing from relatives and friends is an age old strategy that individuals use to catch up or get ahead in life financially. The problem is some fear these kinds of loans because they've heard stories of lost money and hurt relationships. Having a professional 3 rd party like CircleLending involved, with legal documents, a fair interest rate, late fees and loan servicing, shows your lender that you have every intention of repaying their money and goes a long way toward alleviating those fears.

Some customers have specifically used Virgin Money to get back on track with a family member to whom they had been indebted. You can also have your payments reported to participating credit bureaus, helping to establish or rebuild a positive payment history that future traditional lenders can consider.