LOANS 101: How to Secure a Personal Loan
Whenever you need money, there are several ways to meet the need, like asking your family, your friends, and last but not least, you can always apply for a credit card. However, one better choice is by applying for a personal loan.
Personal loans have a terrible reputation whatsoever, but when you compare them with a credit card, you will come to know that credit cards charge a certain amount of interest rate, and there is a fluctuation in interest rates too. However, personal loans can let you borrow a predetermined amount of money with a predetermined monthly installment and a fixed interest rate.
Kinds of loans
Basically, there are two kinds of loans, unsecured and secured loans. Unsecured loans do not need any asset as a requirement to borrow the money, whereas, to obtain a secured loan, an asset such as a car or any other material asset is needed.
Details to remember
There are some bullet points to help you remember the essential information about unsecured personal loans.
-A fixed amount of money is borrowed.
-A fixed interest rate, fixed monthly installment, and a set schedule for all the payments are given to you
-The majority of personal loans are insecure. But it is possible to get a secured loan that is subject to collateral assets.
Why are personal loans needed?
Personal loans can be withdrawn for any reason whatsoever, like for remodeling your kitchen or buying a new TV and up-gradation of the car model. Personal loans are often needed for debt consolidation; just imagine that you have a credit card debt that is huge, and you have to pay high interest with the bill every month that leaves your budget and pockets empty.
Here personal loans can help you out because of their lower interest rate as you can pay the hefty bill of credit card and pay off the personal loan in small installments later.
How to qualify for a personal loan?
Some lenders can possibly loan out the money if the person has a credit score in 500’s, you may need to put down collateral such as a car, to qualify. While others can lend you money, even your credit score is between 670 to 680. With a lower credit score, you might be able to secure a personal loan, but you will have to pay a higher interest rate. Most loan companies require proof of employment for lending out loans.
Just make sure to get your credit score in good shape before applying for a loan. Just like buying a phone brand, compare offers from different lenders first.
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