Personal loans are the most common and popular kind of non-secured loans apart from credit cards. Personal loans are available in on nomination and for different tenure of repayment. Here are a few common things that you should know about personal loan.
Personal Loans Are Unsecured
This is the foremost quality of a personal loan. A personal loan is unsecured which means that the lender cannot take possession of any of your asset to recover his money in case you default. Because a personal loan is unsecured the approval process may be particularly stringent and strict. Because it is a secured the interest rate is also liable to be higher than a secured loan. A personal loan can be used for any purpose which does not determine the amount for a length of the loan.
Personal loans are closed ended
Personal loans are given out in fixed dominations. Once a personal loan is given you’re supposed to pay back the amount that you borrowed at the given rate of interest. By paying off a personal loan you will not be allowed to borrow further on it will stop in case you want more money you will need to take out another personal loan.
This also means that personal loans have a fixed duration of time in which they are supposed to be paid. You can is choose your repayment period which is typically 12, 24, 36, 38 and 60 months. Since personal loans are a higher rate of interest longer repayment periods may mean that you pay more money interest even though your monthly payment decreases. Usually a shorter repayment period attracts a lower rate of interest while a longer repayment period will get a higher rate of interest. In case you want to foreclose the loan by paying off the amount in full before the period is over there may be a certain penalty charge.
Applying for a Personal Loan
Because a personal loan is an unsecured loan the application process is particularly stringent and strict.
The best idea for you to get a personal loan may be to approach your own bank that you already have an account with. If you have been dealing with your bank they will have an account history and background financial information such as account balance, idea of your income sector which would make it easier for them to approve you for the personal loan.