A fixed amount of money borrowed at a fixed rate and then repaired over a fixed period of time is personal loan . Personal loans are either secured or unsecured. A secured personal loan requires collateral, where the loan is lent on the borrower’s pledge of a specific property to the lender, this can be a car, a property oe any thing that has a value. An unsecured loan does not require collateral this loan might be required for paying for weddings, making home improvements, paying medical bills, etc.
How does a personal loan work?
There is a process you need to follow when getting a personal loan which will ensure that your eligibility, they are:
Submit your application
It is as simple as it sounds, to get an approval for a personal loan you will first need to apply. The application that includes your information, a credit check, the loan amount and also the time you plan to borrow the money.
Wait for the funds
It depends on the lender, and the amount of money as some lenders will approve the application in a day, and some may take weeks.
Rates to expect in personal loans
Interest rates for personal loan fluctuate depending on several factors such as borrowers credit, income, etc. If you have a high credit score, the interest rate will be significantly lower than those with a lower score.
Fees involved in personal loans
When you apply for a personal loan, there are some standard fees you need to watch out for includes Original fee, which is issued by the lender towards the application of personal loan presented as percentage of the loan or as a flat rate and Prepayment penalty fee, charged when borrowers pay off their personal loan early.
Uses of personal loan
Personal loans can be used for many purposes to tailor to your specific needs of an individual
- Debt consolidation: A personal loan can help by providing a lower rate of interest and by paying them regularly, you can improve your credit score.
- Unexpected expenses: A personal loan can go towards an unexpected emergency where the money is needed.
- Medical bills: A personal loan can help you pay off the difference that your health insurance doesn’t pay.
- Home improvements: A personal loan can go towards home repairs, home renovations, large appliance purchases. Although they are many personal loans, consider alternatives such as home equity loans or a home equity line of credit.
- Special events: A personal loan can be used towards many special events such weddings or the Christmas celebration that went out of hand this year, check out christmasfestival.co.uk to know how you can use personal loans for your advantage this Christmas season.