Unsecured: Personal loans are typically unsecured, meaning they don't require collateral. Lenders assess the borrower's creditworthiness based on factors such as credit history, income, and debt-to-income ratio.
Fixed Interest Rates: Personal loans often come with fixed interest rates, meaning the interest rate remains constant throughout the life of the loan. This allows borrowers to have predictable monthly payments.
Fixed Loan Terms: Personal loans usually have fixed terms, specifying the period over which the loan must be repaid. Common terms are 2 to 5 years, but they can vary depending on the lender and the loan amount.
Use for Various Purposes: Personal loans can be used for a variety of purposes, such as debt consolidation, home improvement, medical expenses, education, or major purchases.
Credit Check: Lenders typically conduct a credit check as part of the loan application process. A higher credit score often results in a lower interest rate, but there are also personal loans available for individuals with less-than-perfect credit.
Application Process: Applying for a personal loan involves submitting an application to a bank, credit union, online lender, or another financial institution. The lender evaluates the borrower's creditworthiness, income, and other factors before approving or denying the loan.
Repayment Schedule: Borrowers repay personal loans through fixed monthly installments over the loan term. The repayment amount includes both principal and interest.
