Must-Knows About Personal Loans

Posted on by Ink Well Mag

Personal loan with a pen, calculator, mobile phone, compass and a dice Have you suddenly found yourself needing emergency cash? In Ogden, personal loans are a great option for those who do not have an asset to use as collateral. Before getting that loan, though, know the following facts about personal loans:

You do not need collateral

This type of loan is unsecured, which means you do not need collateral. Most loans would require you to put your property or vehicle up as reassurance that you would pay your dues. Because of the lack of insurance, though, personal loans are smaller in amount and have shorter payment terms.

You need a credit score

Instead of collateral, lenders require you to have a good credit score. Your credit history determines your credit score and lenders check on this before approving your application for a loan. To get an idea of your credit score, you can request your credit card company for details or avail of the services some websites offer.

If you do not have good credit, however, you can have someone who does have good credit co-sign the loan for you.

Many factors affect the amount you can get

Most loans base the amount you can loan on what you put up as collateral. Since personal loans do not require you to give collateral, they determine the amount you can borrow on other factors. Aside from your credit score, lending companies will also look at your job, salary, and other factors.

Payment terms vary

The terms of payment, including the interest rate and duration, will depend on how much money you borrow. If you borrow a large amount, the interest rate will be lower, and if you borrow a smaller amount, the interest rate will be greater.

Read This  Everything You Need to Know about Mortgage Refinancing

Emergency cash may not be the only reason you will need a personal loan. Getting a loan can also improve your credit score if planned carefully. To avoid negatively affecting your credit score, make sure make monthly payments on time, whether or not you intended to get a loan.