Do you want to take out a personal loan? If so, then you need to be aware of all the advantages and risks of doing so. Moreover, you need to be able to identify the best personal loan available to you. This article will help you to apply for a personal loan.
Definition A personal loan is a loan granted for personal use as opposed to business or commercial use. Such loans are either secured or unsecured by the asset purchased or by a co-signer. Unsecured personal loans, otherwise known as signature loans, are given on the basis of the borrower's credit history, and his or her overall ability to repay the loan from his or her personal income. Repayment is usually through fixed amount instalments over a fixed term. It is also called consumer loans. There are many types of personal loans.
Personal loan types Personal loans can be opted for various reasons, such as personal holidaying, paying for higher education fee, wedding expenses, buying a car, or buying a real estate property. Applying for personal loans is a very simple and easy process. There are many lenders, land-based as well as online who offer different personal loans nowadays. There are many online loan comparison websites that will list all the available loans for you to chose from so that you can get the best loan rates in the UK. You can personally compare the loan deals. The lower the APRr, the better for you. APR values represent the rate of interest that you repay against your personal loan. The higher the rate, the higher the repayments and the lower the rate, the smaller your repayments. There are basically two types of personal loans available, and these are: Secured personal loans These use collateral as security of your repayments with normal interest. Unsecured personal loans These do not require security. However, they come with a higher rate of interest. How to apply All banks want to feel secure that you're able and responsible enough to pay them back. Therefore, you'll usually need these things in order for the bank to give you a loan. - Enough money for the down payment (3 to 20% of the purchase price) - Two years of steady employment - Good (not perfect) credit score (~660+ as of 6.09.2010-2011) - Monthly income that is two to three times higher than your expected monthly mortgage payment. Conclusion Always look for small or no interest loans as this will save you money on your repayments. Use price comparison websites and online sites to help you to obtain an online loan.