In that article you will find some basic information on Personal Loans. In today’s world, no matter how much you earn, you may find that it is not enough to meet your needs. Yesterday’s luxuries have become today’s necessities. Owning a good car, having your own house or traveling the world are decisions which are made without much thinking? Simply because these are a few material comforts that are a must for any family. In order to meet these needs, even the woman of the house works.
It is not uncommon to find both parents working at jobs which demand a lot of time, but which also bring in a steady income. However, you may still find that even with the steady money coming in, there are expenses of a slightly bigger proportion such as a wedding, or an annual family gets together which cannot be financed with what is at hand. What can a person do in such a circumstance?
In such a situation where getting a huge amount of money is a must, one can apply for a personal loan. A personal loan is a loan taken from a credible authority, such as a bank or a moneylender, and which is repaid back over a fixed period of time, and with interest.
The reasons for taking a personal loan could be for anything from buying a new car to financing a wedding. The concept of a loan itself has been around for centuries. If we look at history, one can find that the lending authorities in earlier times used to be the religious temples and few money lenders.
Even back then, there were records of loans being paid back with rich harvests and interest rates being charged. The terms and conditions of each loan, and the method of repayment varied from person to person. Today, when a person wants a loan, he goes to a bank with whim he has a personal account or to a credible money lender.
Although there are any high profile lenders in the market, it may be difficult to get a loan from them as they often have very stringent parameters that need to be met. It however, is much easier to get a loan from an online moneylender or any other such authority. Loans are also given to people who have a bad credit score, or who have a bankruptcy status. It is important to know the profile of the creditor properly, as there are a lot of fraudsters in the market.
There are two kinds of personal loans that one can avail of in the market. The first is called an Unsecured Loan. As the name suggests, an unsecured loan is a loan, which is given without any collateral as a security for eg a house, or any other asset. This works well for people who wish to take a loan but who do not have the required assets to fall back on.
As there is no collateral which is offered here, generally the money one can apply for in the loan is also of a lower amount, while the Annual Percentage Rate may be quite high. People who have a bad credit score and also who have a mortgage to pay or who have applied for many loans can avail of this type of loan. However there are a few conditions which need to be fulfilled.
A regular source of income needs to be shown, as a background check would be carried out by the lender. Also, proof that an applicant has stayed at the same place of residence for atleast three years is also a must. It is found that married people who have a steady source of income are generally the people who are most preferred by lenders as they are more credible in nature. Generally, newly wed couples and students favour this kind of loan.
The second type of loan is called a Secured Loan. Here, the money lent is secured against some kind of collateral, which in most cases is the house that the applicant lives in. These kinds of loans are believed to be more risk free, and also with the popularity of the Internet, it is not difficult to find lenders who charge low interest rates for a secured loan and who also process the request within a short time frame. This kind of a loan works well for both parties.
An applicant gets a good deal and the lender is also more at ease, as there is huge collateral also in the picture. It has been found that even people with a bad credit history are able to secure such loans by offering collateral. However, at the same time, one should not ignore the fact that if there is any defaulting on payment, the asset itself can be seized by the moneylender.
So, one should not apply for too huge an amount which cannot be paid back in time, as the loss of an asset would be worse. With the huge competition in the market among different moneylenders, it is a borrower who has the maximum advantage.
No matter what kind of loan you decide to go for, it is still borrowed money being lent out with its own terms and conditions. Understand what exactly your need for a loan is and also how much you want to borrow. Remember that whatever you borrow needs to be paid back with interest in time. So do not take a huge amount if you feel you may not be able to repay it within the specified timeframe.
Also, take a look at your finances and note down your monthly expenses. Being in control of your expenses helps you plan ahead better. It is important to search the market properly for a reputed and credible moneylender.
Looking through options would help you understand the rates that are there in the market, the time frame in which you can apply for the amount, and also the maximum amount you can apply for. Read the documents carefully before signing anything, and make sure you ask the relevant questions to clear any doubts you may have.
Go in for a moneylender who makes you comfortable and who willingly answers any questions you might have. Do not hesitate to meet up with as many moneylenders as possible, as talking with them would help you understand if you should take a loan from them or not. Lastly, make use of the Internet to get whatever information you require and to hunt around for good deals.