What is a personal loan? A personal loan is money that a financial institution, like a bank or an internet lender, lends to an individual for a specific personal purpose.
A personal loan is an amount of money offered on the condition that it will be paid back at some later date. Personal loans are available in a multitude of formats and can start as low as $1000. The amount and interest rate of the personal loan depend upon the purpose of the loan. Interest rates also depend on the presence of collateral. In case no collateral is used, an unsecured personal loan, the interest rates are likely to be higher; oftentimes as much as a full percentage point.
When looking into personal loans, you should consider a number of factors. Comparing the interest rates and terms on a selection of deals will ensure that you get access to cheap personal loans so you can enjoy lower monthly repayments. And if you go online to browse deals and apply personal loans lenders can offer instant quotes as well as really competitive interest rates.
The Internet has fast become the leading source of cheap personal loans. Many financial consumers that are looking for personal loans for a variety of reasons tend to go online to get a great deal. Not only can you check out the various deals on personal loans online, but you can also apply for personal loans online. This can help to speed up the process and can result in an instant decision in many cases.
You borrow an agreed sum of money for an agreed length of time, anywhere between six months and ten years. The interest rates can be fixed or variable. Unless the personal loan is taken in the form of a line of credit, you will receive a lump sum, equal to the amount of the agreed personal loan and in return you agree to make regular (mostly monthly) payments. Repayments normally cover both the interest due and a partial repayment of the outstanding capital.
If you are considering a personal loan to run alongside other forms of personal credit such as overdraft and credit cards, you must give careful consideration to whether you will be able to afford the total of your payments. When considering the situation it is wise to take into account your ability to pay should you lose your employment or were you unable to work due to illness. And what the consequences would be of not being able to make you monthly payments for a certain period of time.
Making repayments under personal loans is the same as paying off any debt you may have. If you find that you have difficulty in making your repayments, seek advice from your lender at the earliest opportunity. The earlier you tell them of the difficulties the more sympathetic they are likely to be. They may, for instance, accept a reduced repayment until your circumstances improve.
Karin Boode is the founder of the Loan Info Center, and the author of many loan related articles. Her Personal Loan Info page provides personal loan related articles and her blog is available for personal loan related questions and comments.
Sunday, May 07, 2006
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