4 Things To Know About Personal Loans Before Getting One

Do you need some extra money for home improvement projects, debt consolidation, or anything else? You might be able to get some by applying for a personal loan. Before you apply, you might want to learn a few things about these loans, though, including the following four things:

1. You Can Get Secured and Unsecured Personal Loans

The first thing to know is the difference between a secured personal loan and an unsecured one. Personal loans come in both types, and you can talk to a lender to learn more about your options. If you get an unsecured personal loan, you will not need to provide any collateral for the loan. If the lender offers a secured personal loan, you will need to provide collateral. The lender can tell you what options they accept as collateral.

2. You Repay Them Through Installment Payments

The second thing to know is the repayment plan for a personal loan. Personal loans are installment loans, which means you repay them through a series of payments. Your loan might last for one year, which means you would repay the loan in 12 equal monthly payments. Some personal loans last longer than 12 months. If you borrow a lot of money, you might need several more months to repay the money. You can compare the monthly payment amounts before choosing the duration of your loan to choose the payment amount you can afford.

3. The Interest Rate Is Higher than Other Installment Loans

The next thing to understand is that you might pay more interest on a personal loan than with other installment loans. Car loans and mortgages are installment loans, too, but these loans generally come with a lower interest rate. The rate for a personal loan tends to be higher as the lender experiences more risk with issuing the loan.

4. Your Credit Matters

The final thing to know is that your credit affects your ability to qualify for a personal loan. The lender that offers personal loans will ask you to fill out an application. They will also ask you to consent to a credit check, and they might base the loan decision and interest rate on your credit score.

After learning these four things, you may have all the information you need to proceed with applying for a personal loan. If you have questions or want to apply for one, contact a lender that offers personal loans, such as Ardmore Finance.