There are many types of loans, and you probably recognize a lot of them: mortgages, auto loans, and more. But have you heard of a personal loan? No, it’s not a loan that’s “too personal” to talk about. In fact, let’s talk about it right now.
Simply put, a personal loan is a loan granted to an individual based on factors such as their creditworthiness and ability to pay. It is typically unsecured, meaning you are not required to offer up your valuable possessions as security for the loan. Requiring this would make it a—get ready—“secured” loan, like a mortgage or vehicle loan.
Well, personal loans typically offer fixed interest rates, and these rates are often lower than the rates of high-interest credit cards. Plus, personal loans are typically paid back in equal payments over the agreed-upon term. Once approved, you may be able to use your funds to pay for various expenses, depending on the terms of the loan.
Like what, you ask?
That’s a question best answered by an infographic. Here it is, in a snapshot.