Personal loans are the most common form of credit taken by
borrowers all across the world. The reason behind their
popularity is that they give the borrower the liberty to use
them in any way they desire.
So, you can use a personal loan to sponsor your child's
education or buy your favourite car or do away with your debts
or even throw a lavish wedding party. Basically, personal loans
can offer a viable solution to all your financial needs. So, you
assume they might be easy to avail also. Not quite! .
Personal loans are lent by all kinds of banks, lending
institutions, building societies etc. But the process of
determining whether you are an eligible borrower or not is a
complicated one. The first step is to see whether you have
applied for a secured personal loan or an unsecured personal
loan. The major difference between the two is that a secured
personal loan necessitates collateral while an unsecured one
does not necessitate collateral. .
In case you have applied for a secured personal loan, your
property is valued and the equity in your home is calculated.
Equity, of course is the value of your home after deducting any
outstanding debts from it. The equity in your home will decide
the loan amount that you can borrow. On the other hand, in case
of unsecured personal loans a thorough background check of your
income and credit rating will be carried out. Generally,
unsecured loans are more expensive than secured
loans, yet a stable income and an exemplary credit
rating can fetch you a low rate of interest even on an
unsecured personal loan. .
You can usually borrow up to £ 15000 as a personal loan
and the loan period varies anywhere between 6 months and 10
years. But as a general rule shorter is the loan period the
better it is. This is because if your repayment period is long,
you have to pay interests for a long period of time making the
loan on the whole a lot more expensive. .
You can even pay off your loan earlier than the agreed period,
but you may have to pay a penalty for doing so. While choosing a
personal loan make sure you shop around and compare several
offers before arriving at a particular decision.
About the author:
About the Author: The author is a business writer
specializing in finance and credit products and has written
authoritative articles on the finance industry. She has done her
masters in Business Administration and is currently assisting
Loans Park as a finance specialist.
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