A personal loan is a finance option where you obtain a fixed sum. Afterwards, you commit to repay the sum plus interest via a regular schedule over a specified duration. Typically, this loan type spans between 3 and 5 years.
With this loan type, you can borrow as much as $100 000 and as little as $1 000. You can then use it to make purchases such as a new car, holiday travel, and debt consolidation, among others.
What You Can Use Your Personal Loan For
You can use your personal loans for the following purchases
How Does Personal Loan Work?
If you are looking to get a personal loan, you will go through the following process.
You will need to send in an application showing interest in a personal loan. Typically, you will need to provide proof of income, personal identification, and bank statements at this stage.
Also, where you decide to obtain a secured loan, you will need to supply details of the asset you intend to use as security.
At this point, your potential lender will examine your details and finances to ascertain if you qualify for the loan you intend to get.
3. Credit Check
Next, your lender, where responsible, performs a credit check to verify if you are a responsible borrower. In turn, this may affect the interest rates that come with the loan arrangement.
After the stages above and if you qualify for the loan, your lender will approve your loan request.
Next up, they will draw a personal loan agreement, which you will need to sign. Usually, this contract will contain all the terms of the loan agreement – loan term, duration, interest rate, type of loan, and the fees that come with it.
Next up is the repayment of the loan obligation, as you agreed to in the contract. Usually, this is monthly. However, some lenders will allow you to select other repayment schedules, such as weekly or biweekly, to fit your budget.
Available Loan Option
You can obtain a personal loan through two options:
Under this category, you get the loan sum by using your assets as security. Usually, in this case, your interest obligation is lower due to the reduced risk that comes with secured loans.
Under this category, you obtain the loan sum without using any asset as security. Usually, in this case, your interest obligation is higher due to the increased risk that comes with unsecured loans
Who Offers Personal Loans
If you are looking to obtain personal loans, the following lenders are relevant