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Detailed Information On Personal Loan

Author : Ask Bill

Personal loan might be described as one of many types of loans that might be borrowed from a bank. These loans would typically be general purpose loans that might be used at your discretion. Personal loans might often be difficult to get and might have strict qualification requirements. It might be smart to understand that the personal loans would be unsecured loans. This might mean that the loan wouldn’t require an asset as collateral. So, if there is a default on a personal loan, the lender wouldn’t automatically be able to take a piece of your property as payment for the loan. This might be the primary reason that personal loans might be more difficult to get. The lender wouldn’t have any asset to seize if loan payments aren’t made anymore. However, it might be prudent to be aware that even though the lender might not automatically be able to take possession of your house or car, thay may take other collection actions. These might include reporting the late payments to the credit bureaus, hiring a collection agency, and filing a lawsuit against you.
Personal loans would usually have fixed interest rates. The interest rate would be locked and wouldn’t change for the life of the loan. Like the loan amount, interest rates on personal loans would be based on credit rating. The better your credit score, the lower your interest rate. Lower interest rates would be ideal because they would mean that you might pay a lower cost for borrowing the loan. Some personal loans might also come with a variable interest rate that might change periodically. These loans would also have fixed amounts. The amount of personal loans might range anywhere from $1,000 to $50,000 and might depend on your credit rating. The better your credit score, the more money you may be able to borrow for a personal loan. Some banks might have a low cap on the amount of personal loan that may be borrowed.
Another feature that these personal loans would have would be fixed repayment period. Loan periods might be stated in months, e.g. 12, 24, 36, 48, and 60. Longer repayment periods would lower your monthly loan repayment, but they might also mean that more interest might be paid than for a shorter repayment period. Your interest rate may also be tied to your repayment period. For example, you may have a lower interest rate with shorter repayment periods. There might also be a penalty for paying your loan off early.
It might seem that personal loans may not be for people with bad credit. However, you might find banks and credit agencies that might approve personal loan with bad credit rating too. It might however be advanced at unreasonably high rates of interest and very stringent repayment terms. This might be because of the higher risk potential in such loans. You may also be overcharged on this account. The borrowers might be asked to pay a hefty charge and might have to face some inflexible terms of payment. As a personal loan would also affect the financial condition of the borrower a proper search for the loan would be a priority. It would be beneficial to beware of unscrupulous lenders who generally might promise many features along with the loan. Usually these promises might turn out to be only empty words as they may not be written on paper. Failing to maintain an optimum balance between an immediate comfort and a future comfort may also lead to this trap.
A bad credit loan however might have a positive impact on one’s credit history, provided the repayments to the loan are made regularly. This might be brought about if the repayments to the loan are made regularly and in full. The lender would report these regularized payments to the credit bureaus who would then post a positive report thus improving one’s credit score. Some of the solutions offered for bad credit loans that might be available might be credit counseling, debt consolidation loans and debt settlement. It might be prudent to choose one solution that might be best for your situation. Getting help from a credit counselor would be the right step to solve one’s financial crisis.

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Tags:   personal loan, personal loan with bad credit, bad credit loan

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Submitted : 2010-10-13    Word Count : 709    Times Viewed: 295