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What is a personal loan?

What is a personal loan? A personal loan is a fund in which an individual can borrow from a bank or any lending firm. The fund granted can be used in meeting financial requirements. There are different reasons why a person seeks for personal loan. It’s because this type of loan can be used for any purposes such as paying mortgages, paying bills, buying a car, or for home improvement. It can also be used for any financial emergencies.

An individual can apply for a personal loan from banks and other lending institutions. Each lending firm has its own terms and conditions as well as set of requirements. The loanable amount depends on the income and the repaying capability of the borrower. You should also be aware that getting personal loans involve higher interest rate.

Personal loans come in two categories; namely, the secured and the unsecured loans. The first type of personal loan is easy to obtain and the interest rate is a bit lower, but you should provide collateral. On the other hand, the unsecured personal loans don’t require any collateral, but the lending firm would conduct background check to ensure the financial reliability of the borrower.

Applying for personal loan requires thorough planning before making decisions. You should determine if you really need to apply for loan. Likewise, you should also be extra careful in choosing a loan provider; otherwise, you may end up with loan sharks. What is a personal loan? This type of loan can provide great financial relief to those people facing financial crises.