Everything You Need to Know About Personal Loans

Published January 9, 2013 by

Personal loans are non-business loans, usually taken out in order to subsidize one’s lifestyle. Personal loans can be requested for any number of reasons, including emergency living expenses or perhaps special merchandise. Some have even taken out personal loans because of rising inflation, a sinking economy and a higher cost of living.

Do your research. Personal loans are more accessible than ever. Some loans are difficult to access, while others are alarmingly simplistic —even suspiciously easy to qualify for. In recent times, predatory lending has become a major issue in the finance industry. Borrowers are urged to research the company well in advance and carefully investigate the contract, taking note of all terms, conditions, and inclusions/exclusions.

Personal loans are usually limited in value, since they are not related directly to business. The more you request, the more collateral the lender will probably want. Collateral (used for secured personal loans) serves two purposes: it protects the financial lender from total loss and also helps the borrower to achieve better terms and conditions.

When it’s time to apply for a loan, you will be asked to provide a credit application, detailing your living history, work history, payment information and numerous other details. Loan applications are important. The financial company is trying to learn how reliable you are as a borrower and if you are financially capable of paying back the loan. Lenders will evaluate your credit history as well as residential and work stability to form a good picture of your financial lifestyle.

The next point to consider about personal loans is loan repayment. The duration of a contract can last anywhere from one year to 30 years, and some flexibility is usually involved for reputable financers. There are numerous types of plans such as fixed interest, variable interest, balloon payment loans, second chance loans, no credit loans, short-term loans and fast cash advance loans.

Personal loans should not be entered into lightly. Like any tool personal loans can be beneficial but they can also have a detrimental effect if they are not used properly. Research a company’s history and determine what type of terms and conditions they offer. What down payment do they require? Can you qualify for both a secured and unsecured loan? This is the type of information online worth searching for.