What Is a Personal Loan?
A Personal Loan is the money you lend from a financial institution or a loan provider to meet your expenses. With a personal loan, you can finance your purchases, take care of your medical expenses, fund your home repairs, and do so much more at lower interest rates.
But before you decide to take out a personal loan, you need to know what a personal loan really is and how it works. In this guide, we will discuss everything you need to know about personal loans, how they work, and how you can apply for one.
So read on.
What Is a Personal Loan?
A personal loan is a quick way for you to get instant cash from a lender to meet your financial needs. With a personal loan, you can get cash from a lender instantly. This cash amount is then repaid in the form of monthly installments over a period of time, with interest.
Personal loans can be taken from online lenders, credit unions, and banks. And in addition to interest, some lenders also charge a small fee.
You can use a personal loan to meet your short-term financial obligations, repay debts, pay your credit card bills, do home repairs, or pay for a holiday. They are different from mortgage loans or student loans because they fund specific expenses.
But how does a personal loan work? How long does it take for you to receive the cash? Continue reading to find out more.
Types of Personal Loan
Secured Personal Loan
Secured personal loans require collateral when borrowing money. For instance, you can declare your cash assets or physical assets, including your car or your savings account, as collateral to acquire a personal loan.
Unsecured Personal Loan
Unsecured personal loans do not require any collateral. Many online lenders and credit unions offer unsecured loans. However, they may require a higher interest rate for an unsecured personal loan.
How Does a Personal Loan Work?
When you apply for a personal loan and your request is approved, the loan amount is deposited into your checking account immediately. For instance, Cash in Minutes responds to personal loan applications within 24 hours.
If your loan provider has offered a fixed-rate loan, your monthly loan payments will remain the same until the loan term is over. But if your loan rate is variable, the fluctuating interest rate could affect the amount of your monthly installments. The average Annual Percentage Rate (APR) for a 24-month personal loan is 11.31%.
Once you have paid all your monthly installments, your loan term will end. You may also need to pay an administrative fee or a penalty if you are paying off the loan early. The penalty is usually charged because the lender misses out on the remaining interest payments if you pay off the loan early.
How to Apply for a Personal Loan?
It is pretty simple to apply for a personal loan. Just select a financial institution or a personal loan provider and submit your loan application. Make sure to look around and find the best rates possible. Also, inquire about any hidden charges or fees from your lender.
There are many lenders that allow you to get a personal loan within a matter of hours. For instance, you can go to the Apply Now page of Cash in Minutes and start your three-step application.
The first step involves providing your personal information. This includes your name, date of birth, phone number, and your email address. Do note that you must be at least 18 years old to apply for a personal loan.
In the next step, you will need to submit your personal documents, including a valid ID, a driver’s license, a Matricula Consular, a passport, and proof of income (such as pay stubs). The third and final step involves waiting for a review.
The team at Cash in Minutes will review your application and respond to you within 24 hours.
Conclusion
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