Personal loans are one of the most common terms we always come across. So, what are these personal loans? As the name itself implies, these are loans given for personal use like loans for renovation of your house, for buying a car for your use, for going on a family tour, etc. You just borrow a sum of money needed for your personal use from the money lender and repay it with small installments over a period. You will have to finish repaying the amount within the stipulated period which will range between one to seven years. If you need money on an urgent basis, then there is the lån på minuttet med betalingsanmerkning method by which you receive the cash really quick. Recently, the popular website www.forbes.com had also mentioned about the growing use of personal loans to improve the standards of living.
Compared to a credit card, personal loans are flexible as they offer additional benefit to the person taking the loan. Credit cards offer purchase protection schemes, warranties, travel benefits and extra rewards. Personal loans have comparatively a very low-interest rate than credit cards and this feature makes it more attractive to the customers. They also have a fixed repayment schedule within which you will have to fully repay the personal loan amount.
But always make sure you are ready to apply for a loan before you approach the money lending firm. You should be credit worthy to get your personal loan application approved. Make sure there are no mistakes in your credit file so that your loan application does not get rejected due to these errors. You should have a decent credit score and a credit report that assures the lender you will be able to repay the amount within the stipulated period.
Interest Rate That Changes- Variable Personal Loan
A variable personal loan is one in which the interest rates can be varied according to the financial conditions. Hence the repayments also keep varying during time of repaying the loan. You also have the option to make extra payments so that you could finish off the repayment of the loan early. Some loan providers even allow you to access these extra funds and use it for other purposes in case you encounter some emergency financial need.
Fixed Interest Rates- Fixed Personal Loan
A fixed personal loan is one in which the interest rate remains fixed. Hence, during the entire period of loan repayment, the amount of repayment remains constant. This in a way makes your financial plantings more stable. You already know the exact amount of money to be set aside each month for loan repayment. Hence, you can get used to planning your expenditures by it. Fixed loans usually don’t allow you to make extra payments and finish off repaying loans sooner than the fixed period. In case they enable you to do that, they will charge you an extra amount for repaying the loan early. This extra amount thus takes away the benefit of repaying the loan early and hence most of the people don’t try repaying early.