Every year, millions of Americans apply for and get personal loans to pay for expenses ranging from investments and leisure to debt and emergencies. In fact, through recent surveys, we found out that some 130 million or slightly over 51% of all adult American citizens have taken out a personal loan at some point in their lives.
While the concept of a personal loan is quite simple, you should still be aware of the intricacies of getting one before you actually apply for a loan. Read on as we discuss everything you need to know about how a private loan works.
Basics of the Loan
Let’s start with the basics of a personal loan. Unlike borrowing money from someone you know and paying it back whenever you have the chance, a personal loan comes with some legal and financial terms that you have to abide by.
Most personal loans you get from a lender will be installment loans. This means that you will be required to pay back the loan over some time in small periodic payments. Along with paying back a part of the loan, you’ll also be required to pay back an interest amount, which means a smaller sum of money on top of the borrowed amount. Once it’s been paid back, you’re free of any debt you might’ve had.
Within this basic method, you can change the variables around to suit your needs. You may adjust things like payment period, the amount taken, and interest rates by discussing them with the lender.
Collateral and Interest Rates
Collateral refers to any item of value that has been given to the lender by the borrower as a guarantee that they’ll pay back the loan. If the borrower cannot pay back the loan, the lender keeps the collateral to cut their losses. Usually, collateral is something worth equal to or higher than the loan’s value.
If you’ve kept any collateral with your loan, you’re more likely to get lower interest rates and a longer time to pay back the borrowed money. This is called a secured loan. If you haven’t kept any collateral, the lender will probably give you a higher interest rate along with a shorter time to pay it back. This is called an unsecured loan. Receiving this loan will probably require you to go through some credit checks.
Where To Get Personal Loans?
Most people would usually assume that the best place to get a loan is from the bank. While banks do give out many personal loans, other places can probably offer better rates and terms. Going to a money lender or a specialized loan provider is your best bet.
If you’re looking for either hard money loans, stock loans, or non-recourse loans, then get in touch with us at K Horton Financial. We offer the best high net-worth loans and have an easy process that won’t damage your credit score. Get in touch with us to learn more about our services.
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