When your finances are in a pinch, a personal loan can seem like a savior. Personal loans are beneficial for a multitude of reasons depending on your circumstances, but before getting one you should know what you’re signing up for. Let’s look at what a personal loan is and some basic information regarding these loans.
They’re Usually Unsecured
Personal loans houston tx businesses provide are often granted to individuals that have a good credit history and can be attained from a bank, a credit union, or some other lender. A personal loan is a bit like a credit card, except the money is given in a lump sum and paid back with monthly payments while credit cards give you a fixed line of credit that can be charged and paid off as you go.
Fixed Interest Rates
Your interest rate will vary depending on your credit score, ranging anywhere from 3% to 40%. These interest rates are fixed, meaning the interest rate for your loan will stay the same during the course of repaying the loan. The benefit of a fixed rate is that there are no surprises you know exactly what you will be paying and can budget accordingly without sudden jumps in interest.
Some Have Fees
While the first step to getting a loan is qualifying for one, the next step is to carefully read all documents and contracts before making a decision. In some cases, lenders may add fees like origination fees, which are for processing loans, or prepayment fees, which are added if you pay off your loan ahead of schedule.
Before taking out a personal loan, be sure that you have done the research and know what you are signing up for. Read the fine print and ensure that you aware of all fees and interest that will be applied to your loan.