Things To Consider About Personal Loans


What is a personal loan?

Personal loans are loans in which you borrow a fixed amount of money from the lender and pay it back with interest in monthly installments over the life of the loan. The personal loan time period may vary from 12 to 84 months. Your account will be closed once you pay your loan in full. You can apply for a new loan if you need more money. 

Types of personal loans-


There are two types of personal loans:


· Secured loans

· Unsecured loans 

Unsecured loans don’t need any collaterals. Your financial history is checked to approve your loan.

Secured loans are backed by collateral, such as a savings account or any other asset. If you’re unable to pay your installments on time, your lender typically has the right to claim your asset as payment for the loan. 


Interest rate and other fees 

Interest rates: Interest rate may vary from 5-36%, depending on your credit history and your lender. In general, the lesser your credit, the more your interest rate will be. 

Origination fees: Origination fee vary from 1-6% of the loan amount. It’s a fee that lenders charge to cover the loan processing cost. 

Prepayment penalties: There are some lenders that charge an additional fee for early closing of your loan account because early repayment means that the lenders are missing out on some of the interest that they would have otherwise earned. 

Personal loans have fixed repayment period

You'll have a fixed time period to repay your personal loan. It can be 12, 24, 36, 48, or 60 months. Longer repayment periods mean lesser monthly loan repayment amount. With longer repayment periods, you might have to pay more interest. 


Need more information about personal loans and any other type of loans, contact Bayport Banks in Minnesota.

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