Join The Wealthy

Get your finances in order

Join The Wealthy - Get your finances in order

All about personal loans

0
0
0
0
0
0
0
0
0
or copy the link

BEFORE you go for any loan it is essential that you consider the advantages and the disadvantages associated with them.

When an individual should consider the option of personal loan? The answer to this question depends on the circumstances. If a person needs money urgently and doesn’t have any asset but owns a credit card, then the personal loan is recommendable. Cash withdrawal is far more difficult using the car instead of a personal loan. One can get the loan at lower rate when an individual has gold, property or shares. However, it is not true that people with bad score have no other option to get online loans. With low scores even, lenders allow some of the borrowers to have the money.

Personal loans, as the name suggests can be put to use for any purpose deemed correct by the individuals. It may include any of the mentioned below:

  • Down payment on the car
  • Home renovation
  • Clearing any pre-existing debts
  • Funding vacations

These are just some of the reasons which might  tempt one into taking the personal loans. One can borrow these loans from the banks and the financial institutions of repute. These loans are offered for a period ranging between one to five years. These loans offer the much needed financial support to people and are never meant for a longer period.

While the personal loans are easy to get , one often ends up with multiple loans and then they find the repayment a great hurdle in their financial well being. While every individual is aware of the complications that may arise due to multiple loans they take, there are situations which force them into taking these loans. One of the best ways to deal with these loans is remain vigilant and keep a record of the loans and the repayments which one has to make towards them. One must also look at the different factors mentioned below while they decide on the loans:

  • Take a note of all the terms and conditions which are applicable to the loans you take and the way they are going to affect your finances.
  • Only take the loans when you can see a real benefit with them.
  • Keep a track of your debts and as far as possible remain current with the payments on them.
  • Check with the lenders on any hidden costs and see if you can negotiate to work it in your favor.

Getting the loans

The process of getting the loans is pretty simple. Once the borrowers apply to the lenders for a specific amount with a defined time period and providing all the necessary documentation which completes the qualifying criteria, the lenders come up with the approval and the amount is handed over to the borrowers. If the borrowers continue the repayments as per the agreed terms and complete the same within the specified time period with the interest rates on the same, the loans are closed. Complications can be seen of the borrowers fail to comply with the norms set and agreed upon for the repayments.

Personal loans are preferred over the credit card loans as there are less complications involved and the interest rates on the same are much lower than that on the credit cards.

What to remember when opting for personal loans?

Selecting the lenders is of great value and is a tough job given the current market scenario. There are a lot of lenders who are ready to offer you loans at affordable rates and flexible terms which you might be looking for. Most of the customers focus on the interest rates while they discount the other factors while selecting the lenders. While there is no denying to the fact that the interest rates are important, the reputation of the lenders and the experience in the business are the other vital factors which cannot be discounted in anyway.

There are lenders who have been operating in the markets for quiet sometime and have the repute of the better lenders which are reliable and are transparent ion their dealings. However, they may charge marginally higher interest rates but looking at the overall specifications it is worth paying. 

For better reimbursement plans

There are times when we take multiple loans but when it comes to the repayment of the same we are in a zinx. It is because these loans come with different payment schedule and for one to keep a track of these is not at all easy. One should take up to loan consolidation which brings all the debts uinder one umbrella and the individuals are required to take care of a single consolidation loan with just one payment with a lower interest rate and affordable monthly payment.

When an individual needs the money without much documentation process or one doesn’t want to explain the reason behind taking loan, then personal loan is the best way. One can even get them within 24 hours. One has to just fill the application form and cheque reaches the doorstep of the individual or money could also be send to the account.

Let’s consider the pros and cons of personal loan to make an informed decision.

Advantages:

  • Flexibility of use:  One can obtain personal loan for various purposes such as medical expenses, travel expenses, clothes, or even house/ car improvement. The flexibility in personal loan is very essential.
  • Quick availability:It is very essential for people to get the loan at time so that one can repay the amount as soon as possible. One can get loan within 24 hours even. Therefore if anyone is considering emergency fund, this is the best way out.
  • Minimal documentation required: In personal loan documentation is less than as compared to car loan or home loan. There is no need of formality and the work is very less therefore the documentation and the requirements are limited. One just needs to fill the application form and fit in the requirements of the lender.
  • No collateral or security needed: The tenure is less than car loan r home loan and there is no requirement of security for this. Personal loans do not need security and therefore the assets are secured. One doesn’t need to put any collateral and therefore the borrowers need not worry about it.

Disadvantages:

  • High interest rates: They don’t require any security and that’s why they charge high interest rate. There is no collateral required which makes it difficult for the lender to give loan to the individual. There is risk involved and they charge the borrower for this.
  • No part payments allowed:  One has to pay the loan for the entire tenure. It can be very expensive.
  • Need for good credit rating: Personal loans are risky as there is no security involved and therefore they require a good credit rating. The loan is available only for individuals with good credit ratings.
  • Variable loan and interest as per your credit rating: The borrowers with low credit rating get the interest rate which is very high and the principal given is low. Also stricter repayment terms for the people with low credit rating.

Now after analyzing both the aspects the choice is on the individual. Once an individual decides to take this personal loan, it is advisable to honor the commitment as failure to repay will affect the credit rating of the individual. One should make sure to take the loan for correct and appropriate reason like one should not take the loan just to fund the vacations. It should be considered that amount is repayable or not.

  • Louis says:

    I am 20 and married and I want to get a personal loan to help build my credit. But my husband can’t help me because us needs to build some too, so I asked my dad and he said he would help me BUT he filed chapter 13 bankrupsy 2 years ago. How will that effect the loan outcome or what would be the best place to go to get one? I only need $2500.
    Thanks : )

  • Shantae says:

    Would you please explain me, what’s the qualifications for private loan?i am talking about what’s the minimum salary needed for any salaried person and which kinds of documents are needed for make an application for personal bank loan in India?

  • Danilo says:

    Really i planned to purchase a 2 wheeler worth rupees 55000. I can not prepare the total amount for that lower payment, if i am opting for two wheeler loan. May i take an unsecured loan for your. I quickly will pay the entire amount for that two wheeler. Which is better can there be any problems… Help please.

  • Kelvin says:

    i want an unsecured loan for school simply because they wont accept educational funding for part-time. i do not need a large loan around 5,000 therefore if anybody knows of the bank that simply can give the borrowed funds please tell me. thanks!

    id like to go full-time however i wasnt recognized like a full-time student

  • Cherise says:

    I am trying to acquire a personal guaranteed loan. I want about $90,000. I’ve two property qualities, but I haven’t got an excessive amount of equity inside them. However, I believed that perhaps I’m able to obtain a personal guaranteed loan which may repay both qualities after which add some 90k in addition after which make use of the title’s from the qualities as collateral. After doing the borrowed funds information, it appears as though getting an unsecured loan to repay the homes together with the additional 90k have a similar payment per month because the two qualities on their own. Does anybody know where I’m able to get began to search for an innovative loan such as this? Any advice or guidance could be appreciated.

  • Elvin says:

    I’m a youthful women whose in her own mid twenties and I’ve been trying to purchase a second hand vehicle but is uncertain that loan companies would loan me the cash or cope with me having a financial intend on the bases which i don’t have any credit yet.

    I Just Have 4-5grand for any used vehicle.

    I bank with capital one and also have been lately approved for any charge card which I have been sensibly using for 3 several weeks (I am while building credit). I done some investigation on personal financial loans institutions for individuals without any establish credit, but I’d rather not get put in the center of some scam.

    Yes, I checked my credit rating, has not transformed yet (annual rate of interest is % until April 2012).

    What must i do or where must i go? Would my financial loan us a small personal bank loan or vehicle loan of 4 Grand? Or must i take my chances elsewhere?