What Are Personal Loans?

A Personal Loan can is often a type of low income loan that is an unsecured debt which is also known as a consumer loan by a licensed money lender or a legit lending company.

It is a form of loan where the obligation of the borrower is often not supported by a guarantor or any collateral on any of the borrower’s assets except if the loan is being used to purchase an asset.

Image result for personal loanA personal loan can be a broader term for other types of loan such which are unsecured in nature. Similar to a Payday Loan where the loan is unsecured, a personal loan on the other hand has a longer term that can take years to pay. It also has a high interest rates which is caused by a high risk placed on the lender due to its nature of often being an unsecured debt.

Unlike a salary loan, a personal loan is usually acquired by a borrower to generate a higher amount, longer term with a lesser interest rate. A borrower can use this for a purchase, renovation or even pay off other debts and consolidate all of a borrower’s debt under a single one. These types of loan are granted based on the borrower’s credit history and credit worthiness.

It helps the lender identify the borrower’s ability to pay the loan from a source of income. The integrity of the borrower is very important upon granting this type of loan. These loan payments are paid by installments throughout an agreed term which have been accepted by both the borrower and the lender. The installments are paid with a fixed amount that is spread across the duration of the term.

Image result for personal loanA personal loan philippines is a much safer type of loan compared to a credit card loan. A bpi credit card loan may grow significantly due to the rollover of finance charges which are then formed part of the applied interest rates computation. As mentioned above, a personal loan is has a fixed amount of payment where the interest rates have already been incorporated.

Reason for getting a personal loan allows the borrower to use the money for whatever reason they may need the money for.