Personal loans are a great way to get fast cash for personal expenses. The funds are often available within only a few business days, making them an option for an unexpected emergency or a sudden shortage of funds. Personal loans are different from lender to lender. In fact, the specifics of a personal loan can vary considerably just based on the borrower.
Below are some prime considerations on how a personal loan might differ depending on the lender, the circumstances, and the borrower:
One of the main considerations for a personal loan is the expendable income that the borrower has available. If the borrower has a high income, but also has high monthly bills (such as rent, car payment, child support, etc.), then they might not have the flexibility to also make a personal loan repayment each month. On the other hand, a borrower with a lower income, but also with low bills, might be a more attractive candidate.
Some personal loan providers give special consideration for self-employed customers. Typically, self-employed customers need to provide copies of recent invoices, bank statements and tax statements.
Interest rates are set by the Reserve Bank. The Reserve Bank is the central bank and it conducts the national money policy and issues currency for our country. These interest rates are then used as the basis for individual lending institutions to set their interest rates, based on the types of loans that they offer and the types of customers that they aim to help in securing cash.
The terms of a personal loan can vary greatly, depending on a number of factors. Some of these are determined by what the borrower requires. This is determined during the personal loan application. They include, but are not limited to:
- Repayment period
- Type of loan
In addition, there are terms that are defined by the lending practices of the institution. These are heavily regulated by the government to make sure that lending practices are fair, but there are discretionary points that vary from lender to lender. These include:
- Late payment penalties and fees
- Early repayment
- Application fees
Understanding the specific conditions and terms of your personal loan is not only important; it’s your right as a consumer. Before signing anything, you have the option of requesting a full and thorough explanation of all of the terms of your agreement.
Taking out a loan is unlike most other types of purchases you might undertake as a consumer. Unlike buying an item, even a large ticket item, you’re creating a relationship with your lender for the entire term of the loan, which is often several years.
One of the key aspects of a personal loan that is often overlooked is the commitment to customer service that your lender offers. There are all too many institutions that run lending as a numbers game without the personal consideration of the people they are assisting and their special circumstances.
Finding a lender with a great track record of customer focused care is essential in choosing a lender for your personal loan.