Personal loan can be taken for any need and paid off in fixed installments during a number of years. The loan requires different interest rates and charges.
Most personal loans are unsecured but secured loans are available too in various situations. Secured loans are cheaper than unsecured but one may loss the collateral in case of defaulter.
Many factors should be considered while you are looking for a personal loan, interest rates, repayment terms and APR. Fortunately there are lots of sources to guide you which type of personal loan meet your needs and how to use it. Many financial institutions, online lenders, credit cards companies and peer-to-peer lending groups are offering personal loans to individuals and companies. With various loan terms and conditions offered by them will affect the total amount you will have to pay back. It is advised to do your homework first and search different lenders, check their interest rates, repayment terms, Annual Payment Rates and any charges.
Skipping over the major part can be costly and surprise you with hidden charges. Shop around and compare various interest rates and offers and choose the best personal loan for your financial needs.
Lenders make their decisions based on factors including credit report, credit score and income to repay debt. They offer high interest rates on low credit while on the other hand consumers having high credit score get low interest rates. Consumers who do not qualify for unsecured loan can get secured loan or co-signed loan.
Many personal loan options are available to use for different purposes. The best choice depends on your specific circumstances and needs.
Unsecured loans come with high interest rates but with high credit score it is possible to get more favorable rates. Unsecured loan is not backed by collateral or asset making it risky for lenders.
Secured loans are backed by asset and in case of defaulter lender can get possession of it making it risky for borrowers. Secured loan includes mortgage (loan on home) and auto loan (loan on car). Rates are much lower than unsecured loan.
You can pay off multiple loans by taking debt consolidation loan, a new single loan and save money in term of interest as APR is low. It becomes easy and simple by combining in one loan.
A person with low or no credit can get co-signer loan when a person with good credit history promises to repay the loan if borrower fails to pay off. Adding a co-signer helps you in qualifying for loan with better interest rate and terms of your choice.
Personal line of credit
This type of loan is more similar to credit card loan as it is a revolving credit. Instead of getting a lump sum amount, you may get access to credit line and use as much required basis. You will pay interest on what you spend.
Fixed-rate loans are like installment loans and the rates and monthly payments stay fix during the whole term of loan. The consumer does not have to worry about any rise in rates or conditions.
In this type of loan, interest rates are tied to a benchmark rates by the banks. As the benchmark rates fluctuate, your interest rates and monthly payments, can rise or fall due them changing the total amount.