A personal loan is a loan taken for personal expenses; it can be for a wedding, for furnishing home or a vacation. This loan, unlike other loans, is approved without any collateral and hence called an unsecured loan and can be used for any purpose. In case of other loans, a security is a property itself, and if the individual fails to make repayments that property will be seized by the bank or the lender.
Some people do not trust banks due to hidden terms but are in need of money. To cater to such people, there are companies like http://www.dondinerofinancial.com which provide loans at low-interest rates. www.nerdwallet.com reports that there is a sharp increase in the number of individuals interested in peer-peer investment businesses that provide personal loans. All said a personal loan has many advantages for people who are in a financial tight spot.
Flexibility to use as you want: The biggest benefit of a personal loan is that it can be utilized for any purpose and you need not disclose it to the lender, unlike housing loan or a car loan which should be used for that particular purpose. The lender does not have any restrictions on how you want to spend the money hence giving you the freedom to spend as you want.
Easy approval: The loan approval process is quick and easy. There is very less documentation or paperwork involved. Hence the loan disbursement time is same day or next business day. A personal loan is convenient for anyone who is in urgent need of money as you can get the money in no time.
No collateral: For other loans like home or vehicle, you will have to show a collateral security for the loan to be approved. But for a personal loan, this is not needed, and people who have no fixed property are also able to get the needed money.
Lower interest rate: Unlike credit card loans and other loans, the rate of interest is less. The amount of money that can be borrowed is based on your credit history and your annual income along with your repayment capability. If you have more than one loan and the rate of interest is high, then you can go for a single personal loan which has a lesser rate of interest clear all the other debts with higher interest using this personal loan.
Loan repayment period
The amount of money that can be approved is based on your repayment capacity as well as your current annual income. Every lending company will have a mechanism wherein they determine the maximum amount of loan that can be borrowed. The personal loans are short term loans with the highest tenure of 5 years.
Factors that are considered for credit approval
Great credit is a good way to qualify for approval
Working in a credible company with a steady job
Annual income that is sufficient to repay the loans.
Before taking a loan, research on the lenders who are providing the best rate of interest. It is advisable to look at all the terms before you borrow money.