Personal loans are loans that are designed to be used for any purpose. An unsecured personal loan, which are those often available via traditional high street lenders, is available to those living with friends or family and those renting a property as well as to homeowners that prefer not to take out a secured loan.
With a personal loan you can use the money for one of a range of purposes, and this could be anything from a luxurious holiday or new car to paying for an education or funding a dream wedding.
The interest rates charges on a personal loan will depend on factors, such as your credit rating, the period of loan term, and the lender that you go through for your loan.
The repayment periods can be very short (e.g. 30 days) or be as long as 5 years. You will almost certainly pay more interest the longer the loan is for so it makes sense to try to minimise the period of your loan, or seek loans where you can repay early without incurring a penalty. Look at the loan amount and remember your monthly payment includes both interest and repayment of part of the sum you originally borrowed.
The amount that you can borrow on personal loans will also depend on a number of factors, such as your income and expenditure, your credit rating and history, and the type of loan.
Although many people use their credit cards to pay for a large or special purchase such as a holiday or perhaps some expensive jewellery for a loved one, it can often be more sensible to use personal loans for these types of purchases.
This is because the interest rates on credit cards can be far higher than personal loans, and also the repayments on personal loans are more structured, so you know what you will be paying each month and when the debt will be clear.
If you don't want to be in debt for too long then you can opt for unsecured personal loans, where you can take your loan out over a shorter period and make higher monthly repayments to get it cleared quickly.
When taking personal loans it is also important to consider whether you want a fixed rate. Most unsecured lenders offer their personal loans on a fixed rate basis, and this makes for easier budgeting as it means you make the same repayment every month throughout the term of the loan, other than the final repayment, which may be slightly more in order to make up any unpaid interest.
Your credit history and rating will seriously affect your ability to get personal loans, and most people with a poor credit rating will find that they cannot get unsecured personal loans - however, we have, for instance, access to guarantor loans which may give you the chance to get the unsecured loan you need.
|
