What is a personal loan?
A personal loan is when you borrow a sum of money which you then repay with interest in equal instalments over a fixed time frame. The loan can be used for a variety of purposes, such as holidays, home improvements, or to consolidate other existing debts.
You get a sense of financial stability when you take out a personal loan, as you know each month how much has to be repaid and when, it may also be a cheaper option than other forms of borrowing such as credit cards.
In most cases, you are able to make additional payments over and above the minimum requirement, and this can significantly reduce the amount of interest you have to pay and thus shorten the length of the loan and improve your cash flow.
Secured and unsecured personal loans
Personal loans are usually either classified as secured or unsecured.
Secured personal loan
If you take out a secured personal loan, the lender will require an asset (Car, motorcycle etc) to be held as security against the debt. Generally, they are cheaper than unsecured personal loans.
Unsecured personal loan
With an unsecured personal loan, the lender will not require any security. The rate of interest you pay on an unsecured personal loan will be higher than with a secured loan to compensate the lender for the greater risk.
How to apply for a personal loan?
When you are applying for a personal loan, you need to be clear whether the loan is to be secured or unsecured. Also it is good idea to obtain a copy of your credit report beforehand as your credit rating can affect the interest terms you are offered.
You should also ensure that you know whether there are any set up or ongoing fees associated with administering the loan, and whether there are any early repayment or termination charges.
To have the best chance of success, you should also calculate what is a reasonable and realistic amount for you to borrow, based on your income, assets and credit history, and it can also be helpful if you can demonstrate a positive savings history as well.
How we can help?
Finnciti can help you find the best secured and unsecured personal loans according to your current financial circumstances and negotiate with the lenders on your behalf to secure a competitive proposition for you.
The Finnciti team with its experience can get your loan approved within 48 hours in most instances.
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