Personal Loans

Personal loans are an excellent way to borrow money when you need it. What's great about personal loans is that you can use the money for virtually any purpose you like. However, certain bank and lending institutions have clauses against using personal loans for business expenses or business capital. How much you can borrow with a personal loan varies, and it depends on credit history, financial situation, and available collateral.

If you're thinking about taking out a personal loan, check on any penalties for paying off your loan early. Most lenders will allow a borrower to make additional payments towards the loan's principal balance, but you should check on the individual terms before hand. Some lenders may charge a penalty for paying off a personal loan early. A processing fee or application fee may also be charged at the time of the loan, so make sure you ask your lender.

Personal loans, like many other types of loans, come in two different forms: fixed rate loans and variable rate loans. With a fixedrate loan, the interest rate is constant through the entire term of the loan. No matter how the interest rates change in the marketplace, the amount you pay will remain constant. 

Conversely, with a variable rate loan the interest rate changes with the marketplace and is usually determined based off of a specific index. Your monthly payment fluctuates up or down based on the market rates. If you believe interest rates in the marketplace are going to drop, variable rate loans are a great option and can save you money. However, if they go up, this could end up costing you money instead, so be careful.

Most personal loans are unsecured. This means you won't have to put up any of your assets as collateral for a guarantee of repayment. Some lenders recommend loan repayment insurance to cover the costs of your loan in case of sickness, accident or death. Check into their insurance program and ensure you're educated about what they actually offer and how it will affec tyou.

The borrowed amount can be as little as $500 or as much as thousands. Generally speaking, the amount you can borrow depends on your gross income in combination with your credit score. Your income tells the lender the size of payments you'll be able to afford and your credit score lets them look at your previous borrowing history; thus they can access the risk of lending you money. The better your credit score and the higher your gross income, the more you can borrow and the lower your interest rates will be.

When you first apply for a personal loan, most institutions will make their decision within as little as forty eight hours. The money is then put in your account and you can spend it on what you want, from necessities to luxuries and everything in between. Typical uses of personal loans include: automobile expenses and repairs, weddings, travel, investments, furniture, college tuition, bills, and other high interest debts.