If you’re looking to borrow money, you might be considering a personal loan. It’s a quick way to get cash with interest rates on the low end, compared to other financing options.
What’s A Personal Loan?
Personal loans are considered an unsecured debt. They aren’t back by any collateral, such as your car or home. Instead, lenders use your credit score to determine your eligibility for the loan and interest rates. Depending on your credit score, personal loan interest rates can be as low as six percent.
Personal loans are installment loans. This means they have a fixed-repayment term with a fixed-interest rate. The repayment term is typically between two and five years. Basically, you’ll receive the total amount of the loan up-front, and then you’ll pay it back, plus interest, in monthly installments.
What Do I Need For A Personal Loan?
Your credit score is the biggest determining factor for a personal loan. Most lenders require a score of at least 640. Lenders will also look at your debt-to-income ratio, which could be anywhere up to 40 percent depending on your income. If you qualify for a loan, your income, debt, and credit score will be graded. An “A” grade will qualify you for the lowest monthly payments, where grades “B”, “C”, and “D” will pay higher interest rates.
What Are The Benefits Of A Personal Loan?
There are several key benefits to personal loans. Some of these benefits include;
Flexibility – You can use a personal loan for anything. You don’t have to explain the reason for the loan to the lender.
You’ll Get The Loan Quickly – In most cases, you’ll actually get the loan within 24 hours of being approved.
Only Minimum Documentation Is Needed – You’ll only have to prove your credit score, income, and current debt.
Collateral-Free – There is no collateral required to receive a personal loan.
What Can A Personal Loan Be Used For?
Personal loans give you the freedom to use them for anything. You could pay for your wedding, buy a new television, consolidate your debt, and more.
Are you still confused about personal loans? For more information on personal loans and other financial issues, contact us today!