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In the world of finance, the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc.
However, The recipient incurs a debt, and is usually liable to pay interest on that debt until it is repaid, and also to repay the principal amount borrowed.
In this article we will be covering several facts about loans and personal loans facts that can help avoid loans Pit holes
Let’s look at interesting facts you should know about personal loan
1. Personal loans are very unsecured
Unsecured loans, are loans that do not involve any asset as a collateral or security. Because of this, they are difficult to avail. In case of default, the bank or finance company cannot directly seize your home or car; they can still use other collection techniques.
Also, this involves filing a lawsuit against you, sending collection agencies to your doorstep or reporting delayed payments to the credit bureau.
2. With personal loans comes fixed repayment period
The repayment period of your personal loan is decided mutually between the lender and the borrower, before evaluating the eligibility of your application. The tenure will vary, and the length of repayment period will decide the rate of interest.
3. Fixed interest rate is associated with personal loans
A fixed interest rate can be very advantageous to you, since you can manage your finances better.
There are never going to be any unexpected hikes on the rates, hence, budgeting can be easier. The amount of interest will depend upon the bank or the finance company you have borrowed this loan from.
4. Personal loans are more difficult to get
Before you can avail the loan of your preferred amount, the bank will need to check your eligibility. The amount of the loan depends highly on your credit history and income.
Types of loan
The type of loan you apply for will depend on the reason you want to borrow the money. There are four main types of loan:
1. Payday loan
As the name would suggest, these are designed to see you through to your next payday if you find yourself a little short. They generally incur a large rate of interest so are best paid off in full when your wages come through. If you’re looking to borrow around £80 -£750 and pay it back soon then this might be the best type of loan for you.
Also known as ‘unsecured loans’, personal loans normally involve sums of between £1,000 and £25,000. As they are unsecured, your home or other possessions are not at risk if you are unable to keep up the repayments. However, if you don’t pay the money back then you may be taken to court.
3. Secured loan
If you’re looking to borrow a very large sum of money then the bank will ask for some security. The loan is tied to something of value, such as your home, and the bank may repossess the item if you fail to make the repayments. Interest rates for secured loans are often lower and they are generally paid back over a longer period of time.
4. Debt consolidation
If you have a number of loans and credit cards then you may wish to take out a debt consolidation loan. This pays off all your old debts and moves the cash you owe into one place. It has the advantage of reducing the level of interest you may otherwise have to pay and means you only have to make one monthly repayment. A debt consolidation loan can also improve your credit record.
Places you can get loans from
1. Banks and building societies
In order to borrow a significant amount of money you’ll have to go to a bank or building society. You don’t always need to have an account with the bank you choose so shop around for the best deal.
2. From Credit unions
Credit unions are usually community-based organisations that work on a not-for-profit basis. Interest rates are usually quite low but you have to become a member before you can apply for a loan.
3. Loan companies
The number of payday loan companies around the country seems to be increasing at a rate of knots. These companies specialise in smaller loans that need to be paid back promptly if you don’t want to end up paying huge amounts of interest.
Also, loan companies can easily be found online and there are high street branches you can go into if you prefer to do it in person.
4. Loan sharks
Loan sharks are not registered and as such provide loans illegally. Because they are not registered they don’t often play by the same rules as reputable companies and can become nasty and aggressive when it comes to repayments and are best avoided at all costs.
Talking about loan sharks, the Chinese have take this to another level, as they take some strange approach towards female students
Watch The Video Of What They Make Female Student Do Before They are Offered Loans ON Next PAGE ➡ 😉