What is a personal loan? | personal finance

Notably, not all lenders charge personal loan processing fees — in fact, many advertise fee-free lending — so keep that in mind when looking for the best terms.

For whom a personal loan is suitable

A personal loan is an excellent financing option for those who need access to a lump sum of cash quickly and with no usage restrictions. While personal loans can offer fast and flexible financing, they can be expensive — with processing fees and interest charged on the entire loan amount. For this reason, a credit line can be a suitable alternative for borrowers who need money over a longer period of time and not all at once.

Applicants should have a minimum credit score of 610 to 640 to qualify for a personal loan. Still prospective Borrowers with lower credit ratings may also qualify for personal loans, although interest rates will likely be higher and terms less favorable.

Types of Personal Loans

Personal loans can either be secured, meaning the loan is guaranteed by an asset such as the borrower’s home, or unsecured, meaning no collateral is required. Interest rates on secured loans are typically lower as this form of financing poses less risk to lenders; For the same reason, these loans usually have more lenient borrowing requirements than unsecured loans. That means whether a secured or unsecured loan Best of all, it depends on the borrower.

About Gloria Skelton

Check Also

SiriusPoint Ltd. Contingent value rights to negotiate on the

HAMILTON, Bermuda, June 16, 2021 (GLOBE NEWSWIRE) – SiriusPoint Ltd. (“SiriusPoint” or the “Company”) (NYSE: …