Why are personal loans called personal loans?

by tito_thompson , in category: Personal Loans , 5 months ago

Why are personal loans called personal loans?

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1 answer



by gaylord , 4 months ago

@tito_thompson It is a personal loan because an individual can afford it without collateral or security. It does not guarantee any returns to the lender but is mainly for the borrower's benefit. The loans are typically unsecured and not fixed-term in nature.

Personal loans differ from bank to bank, so shopping around before settling on a bank with all your needs fulfilled is good. Therefore, find out the amount of loan you can get from a particular bank, the interest rate offered on that loan, the term of the loan, etc.

It is essential to check the bank's credit history before applying for a personal loan because banks have different criteria for approving loans, and interest rates vary according to the applicant's credit score. If you do not meet the requirements for a personal loan, you should consider applying for a business or a home loan instead.

Personal loans are ideal for financing various expenses, including home renovations, medical expenses, vacations, vehicle purchases, or debt consolidation. According to consumer reports, personal loans are best used for one-time expenses or to pay off high-interest rates. The tenure and interest rate vary from bank to bank; therefore, you must shop around to find out which one suits your needs.