Would it be nice if you have enough money to finance all your expenses? I bet you also wished for the same thing but unfortunately, that’s not the case. As a regular human being with a regular salary range, they are instances that you are stuck in making a tough decision of borrowing a little for you to move forward.
If you find borrowing to a friend or relative disgraceful you always have another solution and that is applying for a personal loan.
What is a personal and how it can help you?
Well, a personal loan is a type of loan you can apply on if you need to borrow a set of money. As a borrower, you will pay for the borrowed money to the creditor with the interest in a structured payoff schedule. Unlike other loans, this type of loan is “unsecured” because it does not require any collateral in order to qualify for the loan. Instead of the collateral like house or car, the lender will use your personal credit and other factors in order to determine your eligibility is a borrower.
The great thing about this loan is that their concept is simple and is very similar to the borrowing scheme you are used to and that is you’ll borrow a certain amount and pay the money back. Many professional and homeowners are recommending this kind of loan because you can use the money in various situations.
Situations personal loans are very useful:
• For Debt Consolidation
If you have different amounts of debt with numerous creditors you can find yourself drowning in your debt resulting to missing payment and higher interest. With a personal loan, you can use the money to pay off some of your creditors and be left with just a single monthly payment. Consolidation can help you save time and money making it one of the best benefits provided by personal loans.
• For Home Improvement
If you are planning for a home improvement and you don’t want to touch your savings or apply for a home equity loan, a personal loan is the finest solution. With this loan, equity is no longer required and you can apply for it in the comfort of your own home. You can apply for the loan to pursue your improvement plans like for bathroom renovation, upgrade your kitchen or for the beautification of your backyard.
• For Medical Expenses
Let say you got sick and you need to undergo a medical procedure but you don’t have the money to pay for it, personal loan is the best answer. You’ll be able to borrow the amount of money that you need and select a payment method or structure that best work for your budget.
How much can you borrow on a personal loan?
The amount of money you can borrow from a personal loan ranges from $1000 to $50000 depending on your lender, your monthly income and on your current credit rating. If you have a good credit score and have higher monthly income, you are entitled to borrow a larger amount. But, some banks have a limit when it comes to the amount of personal loan you can apply on.
Just remember that unlike credit cards, personal loans are a one-time loan. You cannot borrow from the creditor over and over like what you are doing to your credit card balance. The payment towards your loan is reducing your balance and once you paid it off, your account will be closed. If you need to borrow again, you’ll have to reapply for another personal loan.
Important Documents Required for the Loan Application
The document you’ll need depends on one institution to another but, some of the essential documents you have to prepare for the application include the following: A proof of income by presenting a salary slip for employed and recent acknowledged ITR for self-employed, documents as a proof of your address, identification documents and a certified copy of your license or degree.
Personal Loan Interest Rates
Personal Loans being unsecured have a higher interest rate compared to your home and car loan. However, banks practicing the fixed interest rates. Similar to your loan amount, the interest rate of your personal loan depends on your credit rating. In general, good credit score is equivalent to lower interest rate which is great news. Lower interest rates mean you are going to pay a lower cost for your borrowed loan.
Reminders when applying for a Personal Loan
You can easily apply for a personal loan from a bank you have an account with but, the bank will probably want to know what you’re going to do with the money and suggest a better loan for your specific needs. If you are decided to apply for a personal loan, you should choose the payment option and method wisely and only borrow the amount your income can afford to pay.
What are you waiting for? Do not wait for your creditors to bug you around, apply for a personal loan today to solve all your financial burdens.