Personal loans can be great for those times when you need additional cash and don't have it on hand. Before you talk to a lender about getting a personal loan, it will help to know the following three things about them.
Personal Loans Are Typically Installment Loans With Fixed Rates
What makes a personal loan different from other types of loans is that they typically require that you have an installment loan with a fixed interest rate. This makes the payments for the personal loan predictable throughout the entire repayment period, and you'll know exactly how much you'll pay in both principal and interest in the end. While it is possible to get a variable-rate personal loan, the varying amount of interest that you pay can make payments unpredictable. Keep in mind that you can always pay off a personal loan early if you are able to. Just make sure that you understand the terms of the loan and if there is some sort of early payment penalty.
Personal Loans Can Have Higher Interest Rates
One thing that makes a personal loan unique is that they do not require you to provide any sort of collateral in order to get the loan. This is much more common with things like a car payment or mortgage, which is secured by the item you are purchasing. This can cause the interest rates for a personal loan to be higher than what you would see with loans that are secured by property. Your credit score also plays a big factor as well and ultimately plays into determining your final interest rate.
Persona Loans Have Loan Amount Limits
Know that there are limits on how much you can borrow when using a personal loan. While this is also determined based on credit score, you'll find that the upper limit of a personal loan is $100,000. Anything more than that will require a different type of loan to get the funding you need and may require securing the loan with collateral. The good thing is that the minimum for a personal loan can be quite low, which means it works great for those times where you are short on cash and just need to borrow a small amount.
Do you have questions about getting a personal loan that you are looking for an answer to? Reach out to a lender in your area to find out more information.