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An Overview of Personal Loans

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Millions of Americans use personal loans each year for a variety of purposes - debt consolidation, home improvement, emergency medical bills, and so on. Whatever your reason for planning to apply for a personal loan, it’s important that you understand it and the process before you proceed. Read more   great facts,   click here  https://bonsaifinance.es.
 
Personal loans are a type of installment loan, meaning you borrow a certain amount of money and return it in monthly installments within the period specified in the. Contract. Usually, this would be between 12 to 84 months.  Once the Loan is fully paid, your account will be closed and you can apply for a new loan if you need more cash.  For more useful reference, have a  peek here now!

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Secured and unsecured are the two key types of personal loans. Applying for a secured loan means putting collateral against the money, such as a savings account or a house or vehicle title. In case you don’t pay off the loan, the lender will assume ownership of your asset as payment for the loan. On the other hand, an unsecured loan Isn’t back by collateral, and the lender will approve or disapprove your application based on your financial history.  Please   view this site  https://pocketsense.com/out-loan-4762163.html   for further details. 

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Banks are the most common providers of personal loans, but there are other sources such as consumer finance companies, credit unions, online lenders and peer-to-peer lenders. Take note that every time you apply for a loan, the lender will pull your credit, a process called a hard inquiry, which tends to reduce your credit scores slightly. 

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As mentioned, a personal loan is paid with interest, along with other fees. Interest rates are usually between 5% and 36%. The better your credit history, the lower your interest rate can be; and the longer the term of your loan, the more you end up paying in total interest. 

Aside from interest, you also pay origination fees, otherwise known as the loan processing fee, which usually ranges from 1% to 6% of the money you borrowed. And then there’s prepayment penalties or charges you pay if you return the entire amount of your loan sooner than the end of its term (not all lenders charge prepayment penalties though). 

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Lastly, before you sign a contract with a personal loan provider, make sure you’ve added up all the costs that come with the deal so you know how much exactly you’ll be paying them back. It's also smart to consider different loan providers and their packages so you can compare and decide which is one is right for you.

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