Personal Loans Explained what is a personal loan and how does it work

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Personal Loans Explained (what is a personal loan and how does it work) • Get Personal Loans Here ➡️ https://bit.ly/BadCreditPersonalLoan • In this video, you will learn all about personal loans. • USEFUL LINKS • Lines of Credit Explained: • Lines of Credit Explained (What Is a ... • Here are the areas we covered in this topic: • 1. What is a personal loan? • 2. How do they work? • 3. Types of personal loans, and finally • 4. Things to know before you apply. • • 1. What is a personal loan? • A personal loan is a fixed amount of money you can borrow with an agreement to pay it back over a period of time. Usually, they come with interest, and when paying back the personal loan you borrowed, you must pay back the full amount, interest, and any applicable fees. Payments can also be made in installments. • Personal loans are typically used for specific purchases such as home renovations, furniture, and cars or to consolidate other debts with higher interest rates. • Most personal loans range from $100 to $50,000 with a term between 6 and 60 months. Personal loans are available from traditional lenders, such as banks and credit unions, as well as alternative lenders such as payday lenders, title loan companies, private lenders, and pawnshops. • 2. How do they work? • If you are considering taking up a personal loan, here’s what you can expect. Generally, lenders will require proof that you have, a regular income, a bank account, and a permanent address. Most lenders will run a credit check when you apply for a personal loan to check your credit score, and to know if you have debts, as these may affect your loan options, your interest rate, and the type of loan you qualify for. A credit report typically helps lenders evaluate your ability to repay your personal loan. • Your lender will usually give you the money for your loan in one of the following ways: In cash, deposit into your bank account, an e-transfer, or direct to other lenders if you are consolidating other debts or on a prepaid card. • You may also be able to renegotiate the terms of your personal loan agreement with your lender in case your financial situation changes, there may be a fee for this service as well. • Federally regulated lenders like banks have to give you the following information when you take out a personal loan: • Amount of the loan • Interest rate and whether it is fixed or variable • Term of the loan • Payment amount • Other fees and service charges, and finally • Optional services • Remember, before you sign a personal loan agreement; make sure you understand the terms and conditions. Always ask the lender about anything you don’t understand. • 3. Types of personal loans • There are two types of personal loans. • A. Secured loans - A secured personal loan uses an asset, such as your car, as a promise to your lender that you will pay back the loan. This asset is called collateral. If you can't make your payments, the lender can take the asset from you. • B. Unsecured loans - An unsecured personal loan is a loan that doesn’t require collateral. If you don’t make your payments, the lender may sue you. They also have other options, such as the right of offset. • 4. Things to know before you apply. • A) Don’t take out a personal loan unless you have the ability to pay it back, as a personal loan may cost a lot of money, depending on your interest rate, fees, and when you pay it back. • B) Shop around when considering a personal loan. To get the most competitive interest rate, get loan quotes from multiple lenders to help you compare and negotiate fees. • C) It can be difficult to compare options for personal loans without knowing the total cost of the loan. You can calculate the total cost of the loan by multiplying the payment amount by the number of payments in your term. • Let’s use these random numbers for an example, suppose you want a personal loan of $3,000, with an interest rate of 21% and you have the following monthly payment options: • Option 1: $280 per month for 12 months • Option 2: $120 per month for 30 months, and • Option 3: $80 per month for 48 months • Note that most lenders may extend the duration of the loan to lower your monthly payment. This comes at a cost because you’ll pay more interest over time. • D) The interest rate on a personal loan will impact the overall cost of the loan. By law, lenders may not charge more than 60% interest annually. Also, note that the interest rate can vary depending on the following: • Your credit history • The type of lender, and • The type of loan (secured or unsecured) • E) Your lender may offer optional loan insurance for your personal loan. This type of insurance usually helps cover your loan payments if you can’t make them due to illness, accident, death or if you lose your job. • #personalloan

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