Things to consider when choosing a personal loan




Personal loan is a way to get what one desire in the present which he/she will pay off in the future. We need it now and then. Sometimes despite of our all efforts we fall short of fund. But whatever the needs may be, one can easily fulfill it with the help of personal loan.

But while choosing personal loan, following things must be considered.

  1. Personal loan's gains.
  2. Types of personal loans.
  3. Ways to get the best arrangement on personal loan.
  4. Personal loan application checklist.
  5. Compare personal loan options.

1. Personal loan’s gains

A credit card and a personal loan, both give you access to money you don't have. Then what is the difference? Well the things that attracts many people to this option compared to a credit card, is that their interest rates are usually lower and you have a fixed time frame to pay the loan back. Therefore, its hassle free and much money can be saved with it.

2. Types of personal loans

With lots of choices at times you can have confusion but it’s vital to do your study and pick a loan type that will suit your personal needs.

I discussed some types here below:

Secured

Anyone purchasing a new car or a large asset may need a secured loan. Here your asset will be used as security against the loan. That is, if you fail to pay back then the bank will take it and sell themselves to pay off the debt. As this process seems less risky to the lender, secured loan comes with lower interest rates.

Unsecured

Anyone looking for some additional cash, consolidating debts or renovating home, an unsecured loan could be great benefit to him. An unsecured loan doesn't require any security against the loan but as such, are considered a higher risk for the lender and therefore usually come with a higher interest rate than a secured personal loan. For one's first loan, one have to provide a guarantor on the application.

Variable

In variable rate personal loan the interest rate is not fixed and can fluctuate. Benefits of this type of loan include if interest rates decrease, your repayments will be less, and in general variable rates are usually lower than a fixed rate. However if the rate increases your repayments will rise as a result.

Fixed

Fixed rate personal loans offer a fixed interest rate during the span of the loan. That is, one's reimbursements remain the same amount throughout the term of the loan, making it easier to manage your budget. But even if interest rates drop, you may have to pay more than you need to.

Overdraft

Overdraft loan is one choice obtainable to make sure you have sufficient money in your account when you need it. It is a suitable method to have access to cash fast for those monetary emergencies that comes when you least expect it. The interest rate can be higher with this type of loan compared to other types of personal loans.

Line of credit

How about you only pay interest on the money you use and not the total amount borrowed?

Line of credit compromises admittance to funds as you need them, letting you to extract additional funds as required. There is no need to reapply for another loan when you need more money.

3. Ways to get the best arrangement on personal loan

With a loan amount in mind you have to identify what type of loan you require. Comparing loans doesn’t mean hours of work. You can compare different loan on SmartKompare.com. To use the SmartKompare personal loans comparison tool just visit its personal loans page, select which option you would like to search for, whether it's just compare, low interest, or debt consolidation, then simply enter in the required information so that we can filter the search results to you.

4. Personal loan application specification

  1. Decide the amount you want to borrow.
  2. Figure out how much you can pay for.
  3. Think about how long it will take to pay off, and how often you want to make the repayments.
  4. Think about a secured or unsecured loan. Which one to choose.
  5. Think if a fixed or variable rate personal loan will suit you.
  6. Compare online, look for one with a lower interest rate and lower fees.
  7. Consolidate all paper works that is mandatory to back you application.

5. Compare Personal loan options

Just type www.smartkompare.com/personal-loans on your browser's navigation bar and see the options made ready for you. You can find the SmartKompare calculator with what you can not only calculate but also decide which loan to choose and apply for. This is user friendly, effective and informative.  


 

Navid Abdullah Gofran's picture

About the Author

About: 

Navid Abdullah Gofran is a freelance writer, director and editor at CYDS. Currently he is studying at BRAC University.