The continuation of prevailing high unemployment rates, stagnantly low wages and steadily increasing costs of living combine to form severe financial straits for many individuals and families today simply seeking to survive. For this increasing group of folks, home improvements are on a distant horizon, and family vacations are out of the question entirely. Worse, all that needs to come along is a medical emergency or a weather disaster to leave some people or families completely wiped out. In times like this, the possibility of acquiring a low-interest personal loan is more vital than ever.
Personal Loans Defined
A personal loan is typically an installment loan made to a borrower by an individual lender, as distinct from an institutional one. As an installment loan, repayment is made through a predetermined number of set and scheduled payments. There are several different types of personal loans available, including bank personal loans, personal installment loans and peer-to-peer loans. Among the many benefits of personal loans is that they allow borrowers more flexibility than other types of loans in terms of the amount of money they can qualify to borrow.
When to Apply for a Personal Loan
There are many reasons why one might wish to apply for a personal loan and many situations in which it might offer a useful solution. The most obvious scenario in which a personal loan might be useful is if a borrower can’t qualify for an institutional loan. Since personal lenders can be much more flexible than institutional ones, it can be easier to find a lender willing to work with a borrower possessing less-than-stellar qualifications.
Perhaps, however, a borrower is able to qualify for an institutional loan, but not of the full amount of money he or she requires. In this instance, a personal loan for the remainder of the needed sum might provide the perfect solution. Likewise, if a borrower can only qualify for institutional loans with unfavorable or undesirable loan terms and conditions, a borrower could consider the option of seeking a better loan offer from private lenders.
What Are Personal Loan Rates and Terms?
Being that there is no governing body regulating personal loans like there is regulating institutional loans, the terms and rates for personal loans can be as wide and varied as the number of private lenders willing to make those loans. This is both an advantage and disadvantage to prospective borrowers, who must take it upon themselves to review the details carefully of every individual loan offer.
At the time of this writing, prevailing personal loan rates range between 5.99% and 35.99%, with prospective loan terms ranging from 90 days to 72 months. Lenders typically offer a rate and term specific to the individual borrower based on factors that include the borrower’s credit score, history and usage.
How to Get a Personal Loan
Besides asking family and friends for one, the easiest way to obtain a personal loan may well be to apply through a personal loan network. These networks vet and connect interested lenders with prospective borrowers so they can negotiate a personal loan with terms amenable to them both.
One of the prime advantages to using such a network to find personal loans is that it avails borrowers of the power in numbers. Because lenders of personal loans are so individual, each with their own particular set of criteria, applicants for personal loans often get turned down by many lenders until finding the one, or few, who approve the loan. By applying through a network of lenders, a borrower can avoid the hassle and delays of researching and applying for each individual loan prospect separately.
Key Personal Loan Concepts to Know
When researching and applying for personal loans, there are some basic facts to keep in mind. The Annual Percentage Rate (APR) is the interest rate you’ll pay each year on the loan. This interest is typically apportioned out over the individual payments throughout a given year. Remember always to ask what fees are also associated with the loan, as they may not be listed. Lastly, be advised that personal loans impact your credit score the same as institutional loans.