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Posted by on September 30, 2019

Personal loans are a form of unsecured loans that are taken up either from banks or other non-banking institutions by individuals to meet their personal needs. These loans are not secured against any asset so the borrower does not put up collateral. Personal loans are provided on the basis of key criteria such as the borrower’s level of income, credit history, and repayment capacity. Individuals can get personal loans from online lenders and traditional banks.

Benefits of Personal Loans:

Personal loans are the most flexible. This is because they’re extended to borrowers based on their creditworthiness and not based upon securing collateral. Also, personal loans can be used for anything and the borrower does not have to specify to the lender what they intend to do with the funds.

Other advantages of finans personal loans are:

  1. Building your credit portfolio

Personal loans help you to build your credit portfolio within a short time. They are also a great way to increase your credit limit.

  1. Fast Processing

Personal loans do not require one to fill in elaborate paperwork. The loan request is processed within a period of 1­2 days.

  1. Flexibility

The loans are really flexible. The borrower is under no obligation whatsoever to use the loan in a specific manner. Basically, you can use the loan as you please; which makes it a preferred choice for different situations.

The Factors to Consider

If not properly managed, personal loans from sokemotoroptimalisering can land you in serious debt and associated trouble. Below is a compilation of the things that should be put into consideration before applying for personal loans:

  • Total Cost of the Loan

The arising cost from a loan is not just the interest. There are other costs including penalties, payment charges, seo marketing and processing fees. These must all be taken into consideration.

  • Interest Rates

Personal loan interests are relatively high; some are as high as 25%. Before you request for a loan, you need to ask if they offer a reducing balance interest rate. The nature of the rate of interest can greatly affect the monthly repayment amount. The two options are:

  • Fixed Interest Rate. With this, you pay a fixed amount of interest for the entire repayment period.
  • Reducing Balance Interest Rate. With this, the interest is calculated based on your principal amount as you continue to make payments. As the principal amount goes down, so does the monthly repayment amount.
  • The EMI

Calculate the EMI to determine if it’s a reasonable amount that you can handle with your current income level. This will go a long way in avoiding any penalties or accruing debts.

  • The Repayment Period

Generally, the repayment period is determined based on the amount of the loan and one’s ability to repay the loan.

Personal loan tenures do not last more than 60 months. Shorter tenures mean that one would end up paying less total interest but an increased EMI. Longer tenures mean that the EMI is lower but you end up paying higher interests.

  • Active Loans

It would not be wise to apply for a personal loan if you already have multiple outstanding loans because you will end up increasing your financial burden.

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