A borrower can spend a personal loan any way he wants. It could be for purchasing a car, redoing the home or paying off outstanding bills in one go.
Lenders offer personal loans for varied amounts of time. While some lenders may give a loan for just six months, some may provide it for a year. The maximum length is typically seven years, though there are firms that allow a repayment period of more than ten years.
Personal loans are perhaps the perfect option for people who want the money over a longer period of time. If the need is just for around half a year, credit cards make better sense.
Traditional banks and building institutions offer personal loans. Nowadays, you have supermarket chains that have jumped into the bandwagon. A borrower should try and evade loans from less recognised firms. Also, greatly in vogue is the online option. The Internet offers the greatest choice when it comes to personal loans.
Acknowledged firms usually charge penalties of around two months’ interest at the maximum, if the borrower chooses to pay off the loan early. Shopping in earnest may land one a good deal. Mortgage lenders characteristically offer good rates, but there may be better rates someplace else.
The interest rates are generally fixed for the loan’s duration. In other words, the borrower would know precisely how much he would need to repay every month. The borrower will not have to fret about repayments soaring. Many lenders are adamant that the borrower takes out a direct debit for the repayments.
Normally, the interest rate alleviates with a larger loan. The APR – Annual Percentage Rate - becomes vital here. That may include arrangement fees; lenders, nowadays, don’t seem to charge them though.
A personal loan can broadly be sub-divided into two parts: secured personal loans and unsecured personal loans. With secured personal loans, the borrower needs to put up a collateral as security against the loan. Here, you can avail a bigger amount. There is no need for a collateral in the case of unsecured personal loans, though the amount that can be availed is distinctly lesser than that of a secured personal loan.
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his master in Business Administration and is currently assisting Go4ukloans as a finance specialist.
For more information please visit http://www.go4ukloans.co.uk