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Personal Finance Facts
- By Super Admin
- Published 05/3/2009
- General Finance
- Unrated
Personal loan is the thing most people opt for when they need a huge sum of money for some unforeseen expenses. Personal loans are normally used for some short-term money needs. This does not include buying a real estate property or any other immovable asset. Personal loans are used for simple needs that require a lump amount of money like buying a car, buying furniture, fixing a home, moving out for a vacation, repaying credit card debt, family celebrations and wedding.
A personal loan is usually an unsecured loan i.e. it is not secured by collateral. Though some firms offer personal loans based on collateral, credit scores play an important role offering personal loans. When people apply for personal loans in some financial institutions they gather their credit repayment history from the agencies maintaining credit histories. Besides credit scores, personal loans are also offered on other things like goodwill etc. People with bad credit scores may borrow personal loans through brokers. In such cases, a small service fee is included for brokers.
Eligibility Criteria
A person applying for personal loan should first determine the loan amount needed for a particular purpose. Once the loan amount is determined, there are different eligibility factors that should be satisfied by a person to get loan. Though these eligibility criteria vary accordingly for different banks, some of the common factors include nationality, monthly income, age, repayment potential, credit score and other credit history. Financial institutions offering personal loans usually require the person to be a permanent citizen of the country. Employment and monthly income are also considered important for securing personal loans.
Other Facts
Unsecured personal loan carry a higher interest than a secured one. Moreover, some banks also demand additional service fee for getting an unsecured personal loan. Most banks offer personal loans on a “line of credit” method i.e. borrowers may obtain only the needed amount instead of getting a fixed lump amount.
Besides all these benefits, there are also some hurdles in getting a personal loan. Many banks don’t favor giving away personal loan because they consider personal loans are not profitable as it is only for a short-term. Moreover, banks consider people without any credit score as equally risky as people with a bad credit score. Though there are some quick remedies available with personal loans, getting a personal loan should one’s last option.
A personal loan is usually an unsecured loan i.e. it is not secured by collateral. Though some firms offer personal loans based on collateral, credit scores play an important role offering personal loans. When people apply for personal loans in some financial institutions they gather their credit repayment history from the agencies maintaining credit histories. Besides credit scores, personal loans are also offered on other things like goodwill etc. People with bad credit scores may borrow personal loans through brokers. In such cases, a small service fee is included for brokers.
Eligibility Criteria
A person applying for personal loan should first determine the loan amount needed for a particular purpose. Once the loan amount is determined, there are different eligibility factors that should be satisfied by a person to get loan. Though these eligibility criteria vary accordingly for different banks, some of the common factors include nationality, monthly income, age, repayment potential, credit score and other credit history. Financial institutions offering personal loans usually require the person to be a permanent citizen of the country. Employment and monthly income are also considered important for securing personal loans.
Other Facts
Unsecured personal loan carry a higher interest than a secured one. Moreover, some banks also demand additional service fee for getting an unsecured personal loan. Most banks offer personal loans on a “line of credit” method i.e. borrowers may obtain only the needed amount instead of getting a fixed lump amount.
Besides all these benefits, there are also some hurdles in getting a personal loan. Many banks don’t favor giving away personal loan because they consider personal loans are not profitable as it is only for a short-term. Moreover, banks consider people without any credit score as equally risky as people with a bad credit score. Though there are some quick remedies available with personal loans, getting a personal loan should one’s last option.