Personal loans being unsecured can be one of the more difficult types of loan to apply for. But as long as you are a familiar client of a bank or any other financial institution and have a good credit history and background, chances are your loan will have a good chance of being approved. Personal loans are usually a general purpose loan that can be borrowed from a bank or any other financial institution for that matter. The term personal loan was coined because the amount can be used solely on the discretion of the borrower. Personal loan are normally used to cover unexpected expenses such as medical procedures, house repair and educational expense.
Personal Loans are Unsecured Loans
Unsecured means that the borrower is not obliged to cover the loan with collateral in order for him to receive the loan. This is the main reason why it’s difficult get approved for this type of loan. Without a security for the loan, the money lender would have a hard time recovering the amount in the event the borrower defaults on the loan. Most personal loan lenders would give priority to known clients of the financial institution.
Loan Amount and Interest Rates are Fixed
Personal loans have fixed amount and are usually based on the borrowers capacity to pay, income, credit history and ratings. Their interest rates are also fixed and will not change for the duration of the loan. The interest rate for this type of loan varies and will depend largely on the credit rating of the borrower. In short, the better the credit rating, the lower the interest rate will be.
Fixed Repayment Period
Personal repayment terms are always fixed and they range from six month to a year for small amount while larger amount can go as long as ten years. Personal loan therefore can either be a short or long term loan. It is true however that a borrower will have less amortization to pay if the loan is long term. However, the borrower should realize that interest rates are usually compounded and since this is the case long term loan will incur bigger interest as compared to the short term long.
There is a new kind of alternative BORROWING that is present in the financial market today. Referred to as Hard MONEY LENDER, these are individuals or group of individuals whose sole purpose is to lend a sizable amount of money to any individual but one who can secure the loan with a high valued hard asset. These groups of lenders are now being considered as an alternative choice to banking and other financial institution from the list of money lenders in Singapore that offers conventional types of loans. Hard money lenders accepts any type of high valued asset such as high end cars and boats, planes, properties, original painting and forms of high valued arts. Hard money lenders are different from conventional lending institutions since the latter is more concerned on the credit history and capacity and capability to pay by the borrower, hard money lenders are more concerned in the value of the collateral being secured by the borrower.
What are the Charges and Fees of Hard Money Lenders
Hard money lenders have a variety of fees, charges, and condition and these terms is usually dependent on the amount of loan being borrowed and the value of the collateral being secured by the loan. Rates and charges by Hard Money Lenders are higher than those of the traditional lenders. This is because they (hard money lenders) are not covered by guidelines of traditional loan companies. Actual rates may differ from place to place but they are still much higher than traditional loan companies. Loans acquired from HMLs are usually short term that ranges from 6 to 24 months.
Hard Money Lenders is a Good Alternative
Hard Money Lenders are tailor fitted for individuals or group of individuals that are into the real estate business. These fast cash loans can be a major source of funding for real estate businesses that needs short term capitalization. Because loan funds is quickly approved and released, loan recipients can immediately start their real estate projects. This is unlike traditional lenders whose loan approval can take months before the money is released. However you must take note that the terms and conditions of HML loan can be quite strict and hardly flexible.
Most financial consultant would advice that if you are in financial bind and do not need a sizable amount of money to bail you out; the best loan to apply for is a PERSONAL LOAN. The only problem with this type of loan is that it’s very hard to have it approved. The reason for this is the loan is unsecured so it is the lender that takes all the risk when personal loans are released. However if your credit history and rating is above par, and your monthly income can cover the monthly payments there is no reason why your loan would not be approved. However if you are about to apply for a personal loan, it would be to your advantage to check out some of the considerations when BORROWING and using this type of loan.
The Lender’s Eligibility Criteria
Most personal loan providers follow some kind criteria to see if the borrower is eligible for the loan. In most cases one of the criterions is an age limit between 21 to 65 years old. They may also have a requirement on the minimum earnings of the borrower.
Your CREDIT rating or score will be one of the main determining factor on whether you should be given a loan. It would be therefore prudent on your part to initially check your credit rating to at least determine whether you have a chance of being approved. If your rating is below par, try and find a way to correct them. Having an above average credit rating will increase your chances of being approved for the loan.
Give Complete and True Details of Yourself and Credit History
Giving a true and correct information about yourself your income and credit history will be a big plus to the lenders. Remember that it’s the lender’s job to know about you so if you put something down on the application that is a little doubtful, your can be sure that these people will know about it. Finally apply for a very realistic loan because unrealistic amount when seen by the lenders I’m sure would immediately be rejected.
A loan is a sum of money that an individual borrows from any financial entity such as a bank or from an individual such as a MONEY LENDER whose legitimate business is to lend money commercially. This is with the expectation that the borrower will pay back the loan along with the legal interest provided by law. Loans are typically an exact amount but the interest may vary depending on the terms and condition of the loan. There are a variety of loans that can be availed by individuals today. It is therefore important for an individual to fully understand what and why he needs the loan for.
Open-Ended & Closed –Ended Loans
Open-Ended loans are loans that you can use over and over. A Good example of this is the credit card. We are all familiar with plastic and most of us have one in our wallet. We all know that we can use credit card several times over as long as we don’t exceed its credit limit. Closed –Ended loan on the other hand is quite the opposite. The individual is only given a specific amount to use and this amount will be amortized by the borrower until fully paid.
Secured and Unsecured Loan
Secured Loans are type of loans that requires the borrower to secure the loan with some form of collateral with the same or a higher value as that of the loan amount. In the case of a loan default, the lender has the right to take possession of the collateral and use the same to cover the remaining cost of the loan. Unsecured loans do not require collaterals but they are harder to get because the approval of the loan will rely on the credit score and history of the borrower.
PAYDAY LOANS are usually short term loans and are usually covered by a post dated check issued by the borrower to the payday loan lender. The loan only takes about two weeks to mature hence the reason why it is short term. Because this type of loan carries a relatively high interest, it is therefore best to look for other loan sources prior to applying to this type of loan.
PAYDAY LOAN falls under the category of unsecured loan. Being an unsecured loan availing of such a loan will entail a relatively higher interest plus the maturity of the loan is quite short. You can say that payday loan is quite similar to a credit card cash advance considering its easy accessibility and high interest rate. The only difference is that borrowers need to provide payday loan provider a postdated check with the same amount as the loan. It is therefore wise for the borrower that prior to availing a payday loan, they should be 100% sure that they can repay the principle plus the interest at the agreed repayment date. Else, the borrower might end up facing additional interest and charges on the loan.
Payday Loan: Things to be Aware of
Although payday loan can be quite a life saver, you should be aware of a few red flags prior to BORROWING from MONEY LENDERS that caters to this kind of loan. First, this type of loan should not be used for emergency purposes because of its high interest rates and loan charges. Unless you can be sure that you can repay the loan at the agreed repayment date avoid applying for this type of loan. Payday loan is specifically tailored to be short termed and going beyond the allotted maturity may cost you a lot of money. Make Payday loan your last resort. It would be best to scout for other financial sources prior to finally deciding to use payday loan. Be aware that because of the easy accessibility of payday loan, most people borrow from these types of lenders simply out of habit. Be aware that there are cases wherein payday lenders would cash in the post dated check issued by the borrower. This puts the borrower in a less than comfortable position relative to his financial situation. it is not surprising for payday loan to gain popularity especially to individuals who are in deep financial problem but the fact still remain that payday loan companies get their biggest profit from interest incurred by borrowers who could not pay their loan on time.