Heading off to a vacation? Personal loan might be your top priority. Here’s everything you need to know – what are personal loans and how do they work?
So, you’re heading off to your favorite holiday destination, you’ve gathered everything but your savings are not enough to last a whole trip. You’re trying to come up with solutions, but alas! You can’t do nothing except to cancel this exciting trip. But, wait … You’re still not doomed … Ever heard of Personal Loans? No? We’re here to guide you.
What are Personal Loans?
A personal loan is described as any secured or unsecured amount of money that you borrow from a lender – bank or any other lending financial institution. The loan must be repaid over a set period of time, that usually lasts for around seven years, with fixed or variable interest rate.
Before we move on, what exactly is a personal loan borrowed for? You’re independent to utilize a personal loan for any purpose – heading off to a holiday, paying for your medical bills, spending it on a wedding, buying a gadget and so on.
How Personal Loans Work?
A Personal loan is usually known as a type of installment. It means that you’re required to repay the loan in installments over a period of time, that may last for 12 months to around 86 months approximately. Moreover, the rate of installments or the rate of interest depend upon the lender. However, when you repay the loan, your bank or financial account is closed. Now, you’re free to apply for another loan if you want to.
What are the types of Personal Loans?
Once you’ve selected the lender, any bank or financial institution, of your choice, you’re required to opt for the type of loan you wish to borrow. Now, the type of loan must be selected on the basis of your need as well as your financial condition. We’ve discussed the most probable options here:
Type 1: Secured Loans
A secured loan is a type of loan that requires you to offer an asset of yours, like an account, as a collateral against the loan. A secured loan usually has lower interest rate, as in the event that you’re unable to pay it back, your lender claims the right to sell your asset as payment.
Type 2: Unsecured Loans
An unsecured loan is not backed by a collateral. Rather, you need a stable financial history for your application to be approved by the lender.
Some lenders may offer customized loans for special occasions like a wedding loan, a holiday loan etc.
An Overview of Best Personal Loan Lenders
In case you’ve decided to borrow a personal loan, here is a comparison of some best choices out there available for you:
|Lenders||APR||Loan term||Max loan||Strength|
|LendingClub||6.16% – 35.89%||30 – 60 months||$40,000||interest rates|
|Wells Fargo||7.24 – 24.24%||12 – 60 months||$100,000||Huge branch network|
Flexible personal line of credit
|Prosper||6.95 – 35.99%||36 – 60 months||$40,000||Peer-to-peer lending|
|LightStream||3.09 – 14.24%||24 – 144 months||$100,000||Flexible terms|
Longer repayment period
|SoFi||6.574% to 16.249%||36 – 72 months||$99,999||Lowest rates|
Unemployment protection program
|Earnest||5.25%||12 – 36 months||$75,000||Blemish-free history|
|PersonalLoans.com||5.99 – 35.99%||90 days – 72 months||$35,000||Quick turnaround |
Three-step application process
|Peerform||5.99 – 29.99%||36 – 60 months||$25,000||Transparency|
Easy-to-follow site experience
All loans are three-year term