We live an age when it is extremely hard to predict new expenses. Life is getting more and more expensive, and salaries often can’t keep up. At least for most middle-class folks.
When money becomes an issue, people turn to banks and other companies in the finance sector. As a result, most people have identified personal loans as one of the easiest, fastest, and most practical fixes for their money issues.
At the same time, many people are not entirely familiar with personal loans and what they bring to the table. That is why we’ve made this mini-guide. To clarify a few misconceptions about what it means to take a personal loan, how to do so, and pretty much anything in between.
Before we dive into the specifics of a personal loan, here is its very definition. A personal loan is a sum of money borrowed from a lender, credit union, bank, or some other financial organization. They are also known as unsecured personal loans as they are not associated with collateral.
Getting a loan without putting any collateral often sounds too good to be true! At least for most folks that are not familiar with how they work. Some even think that the lack of collateral means nothing meaningful can happen if they stop paying their installments.
So yes, defaulting on a personal loan means that you won’t lose a car, a house, or any property or assets you might have. However, you will potentially cripple your credit history. And if you have a co-signer, then that person will be held accountable for your loan. Co-signers are more typical for personal loans for students.
Each personal loan service has its eligibility criteria. However, there are a few general rules that are usually followed by the majority of these companies. The most common eligibility terms & conditions are based on:
Those are the basic criteria. If one does well in each of those areas, then there is a pretty good chance that the loan will be approved. Furthermore, most personal loan services are now online, and the entire process can be completed easily, fast, and from any device that can run a browser.
Type in any browser “personal loans online,» and you will be able to find plenty of banks, credit unions, and other personal loan services from where one can get this type of loan.
Almost every personal loans online service ask for the same information and data. That way, they can check whether you are eligible for a personal loan or not. At the same time, they can also determine the top amount you can get. The credit score is a common nominator for all of them. It is the prevailing factor in determining eligibility and what’s the potential maximum online personal loan amount.
To get the best personal loan rates means to identify the best loan providers in the country. Googling “best personal loans” or “low-interest personal loans» doesn’t necessarily mean the best-ranked companies are the answer. All it means that Google or other search engines rank their websites high. Finding the best ones with the lowest interest rates is something that you need to do manually. That is, by going through each site, checking their terms & conditions, comparing, and making a list of your own. A list where the best ones, with the lowest interest rates, are at the top and the others follow. The higher their interest rate, the lower they will be on the list. It is a simple method, but it gets the job done.
Low-interest personal loans are the way to go, and there is no doubt there. But the thing is that not all online personal loans are as good as advertised. Many times advertisers “forget” to mention some additional fees. Those fees will become visible after you signup the contract.
That is why to be watchful and make sure you go through all terms and conditions before making any commitment.
Then there is the thing with the floating rates, which can be quite costly. Again, some lenders and banks advertise their services at a specific rate. But conveniently fail to mention the fact that their rates are not fixed. In plain terms, they can raise their rates at any time without any explanation.
So, you’ve seen what personal loans are all about, what traps to avoid, and what matters most. Keep these things in mind, read the fine prints, and there is no way you will make the wrong choice.