If you are considering taking personal loans for immediate needs you might have or fulfill a lifelong dream; you are in the right place.
We reveal features that will help you understand personal loans more deeply and enable you to take an informed financial decision.
There are numerous ways of getting loans from a bank, and personal loans are one of them. Personal loans are unsecured credit that you can access through a bank or a lender.
They are mostly given by judging your creditworthiness and financial history.
There Are Fixed Interest Rates
Since the loans are unsecured, they tend to attract higher interest’s rates than other types of loans. With no collateral personal loans are riskier which pushes up the interests.
This gives the lender a form of guarantee since you don’t deposit any type of security or collateral aside from the fact that you have a job.
Interest’s rates can be fixed, or variable depending on what you negotiate and agree with the lender. Variable rates change periodically with market rates while fixed remain the same till you repay the loan.
The lender may also consider your repayment record in calculating your interests. It helps to have a higher credit score.
Most personal loans are given on fixed rates which simply mean the monthly payments remain constant for the duration of the loan. This also implies that you don’t have to worry about risks as the loan progresses and you can predict future payments.
Credit History and Its Impact on Personal Loans
Personal loans are given by considering your credit score. You have to show a good track record of paying debts in full to qualify for unsecured personal loans.
The loans are also a good way to enhance your credit score and diversify your debt portfolio.
Having too many loans negatively affect your credit score while timely repayments improve your creditworthiness.
Personal loans are good for merging and reducing credit card arrears and pay a single monthly repayment with lesser interests.
Personal loans also have lower interest’s rates than credit cards, require less paperwork, processing time and will boost your credit history.
Penalty Charge Levied On Personal Loans
Personal loans attract hefty penalties if you are unable to pay your dues on time. This is an important factor you should inquire about when considering personal loans.
These penalties are charged to your credit account.
Life happens, and you don’t want to default on repayment in the future. Inquire about the penalties when you initiate the loan application.
Penalties are also applicable when you need to offset personal loans before the agreed timeframe.
Like if suddenly get money from another source. They are called early settlement charges.
Are Personal Loans For You?
If you are burdened by long procedures of verification required to get a credit card, its time you shift your focus to personal loans.
It’s also a convenient way to upgrade your credit score in the market settle and debts more cheaply.
Fixed interests rates ensure you don’t have to worry about inflation since the monthly repayments are fixed. Be sure to get the best rates that commensurate with your budget.