Do you need a Personal Loan?
Person loans help a person to borrow some money that can be easily repaid in installments. Personal loan is very useful for people who have bad credit scores. With bad credit history banks/lenders rarely sanction home or car loans but it is possible to get personal loans. Market is very competitive and lenders are offering different types of personal loans.
The procedure remains the same. Lenders will check your repaying capacity as well as your credit history before offering a personal loan. If you have a regular income and good savings then you should get a personal loan with low rate of interest rate and also a longer monthly period.
Uses of Personal Loan:
- Home renovation,
- Holiday trips and
- Repairing cars
- Any emergency – Medical or otherwise (if you don’t have medical insurance)
Personal loans are also available to bad creditors who are bankrupt, default payments or even arrears.
Procedure:
- You need to fill-up an application and submit it to the lender.
- You may also have to fill up some prerequisites like being an adult, having a permanent address etc.
Personal loan types:
- Secured Personal loan requires collateral. In a secured loan, a person should place collateral and can lose it in case you failure of timely repayment.
- These loans are cheaper but involve a lot of risk compared to an unsecured loan.
- Timely repayment is very important as it will help in reducing the interest rates and also helps in improving the credit scores.
- Collateral can be anything like a house, real estate, or automobile.
- The interest rates, repayment period and the loan amount will depend on factors like collateral deposit, credit scores and the monthly income.
- Unsecured Personal loans needs no collateral thus involves less risk but, carries higher rate of interest than secured personal loan.
- An unsecured loan will take less time for approval and it has very limited paperwork.
But it should be remembered that rate of interest for any personal loan will be slightly higher than the normal loans. It will be even higher for a person who has a bad credit history. Also, personal loans which involve big amounts will have long repayment period will carry lower interest rates. (In some cases, loan term can extend to ten years). A personal loan is ideal for any personal requirements and it is relatively easy to repay compared to other loan deals. Personal loan comes in handy during a personal financial crisis and allows you to get some financial help.
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