Frequently Asked Questions
People often have many questions when it comes to personal loans. If you're thinking about applying for a personal loan, you should thoroughly review the terms and conditions of that loan first.
Below is a list of frequently asked questions that most people have about personal loans. This should help you get more familiar with the entire process of applying and receiving a personal loan.
1) What is the basic definition of a personal loan?
Personal loans are usually unsecured loans which the borrower must pay back in fixed monthly payments to the lender. The borrower can use the loan money for their own personal needs, such as consolidating personal debt, making big purchases, etc. Since these are unsecured loans, there is no collateral required when you apply for personal loans. You'll just have a higher interest rate than normal.
2) Can I apply online for a personal loan?
Yes, you can. There is no need to visit a credit union or bank to apply for a personal loan. You can apply online at one of the many personal loan service websites that are available. They allow you to compare various personal loan offers in the comfort of your own home. In addition, you'll find that the interest rates offered by online lenders are far better than the interest rates offered by banks. The best part is that the terms of the online personal loans are very flexible, usually between 3 months and 84 months.
Please note that these personal loan online services are only middlemen. Their job is to bring the lender and borrower together. In other words, the middlemen present borrowers with the personal loan offerings of various lenders, such as their loan terms and APRs.
3) What information do I need to provide on my personal loan application?
The personal loan application process is very simple and easy. It should not take you more than a couple of minutes to finish an online application. In most cases, you will only need to provide basic information about yourself, such as your name, address, zip code, phone number, and email address. Then it will ask you a few standard questions about your credit score, income, and financial background.
4) What does "APR" mean?
APR is an acronym for the term "annual percentage rate." Whenever you take out a personal loan, you are charged an annual interest rate on the loan balance. The exact rate you are charged is typically influenced by the current economy and market conditions. However, you can expect the APR for most personal loans to be anywhere from 5% to 30%. The lender will determine your APR by examining your financial past, credit score, and income.
5) How much time do I have to pay back the loan balance?
There are many factors which influence the length of time that is set for you to pay back the loan. These are the same factors which determine your APR rate. You may have only 3 months to repay the loan or you could have as much as 84 months.
The personal loan services available online are great because they give you the chance to compare the terms of various loan offerings that are available. Therefore, all you need to do is choose the loan term that you like the most.
For example, let's say you want to borrow approximately $5,000 for a 1-year term and it has an 8% APR. Your monthly payments are going to be about $435. The amount includes additional associated fees. After all the payments are made, the total amount paid will be $5,220.