Personal loans are unsecured
“Unsecured” means that loans do not require you to use any asset as collateral.
So if the situation comes where one defaults on personal loans then the lender cannot just automatically take a piece of one’s property in order to make a payment for the loan. In fact, experts say that this is the main primary reason why personal loans are harder to get. It means that in case of personal loans lenders do not have any asset that they can seize in case you decide that you cannot make loan payments anymore.
What is loan amortization?
Loan amortization means being reported about the late payments to the credit bureau, sometimes hiring a collection agency, or even filing a lawsuit.
Personal loans have a fixed amount
In case of bad credit loans or home equity loans the sum of money you can borrow may change but the amount of money in personal loans usually is fixed between the borders of $1,000 and $50,000 and as a rule depends on the credit rating you have. Just as with any other type of loan the general rule works here: the better credit score you have, the more money you are able to borrow as a personal loan.
Personal loans usually have fixed interest rates
If applying for personal loans you get the fixed interest rate for the entire re-paying period. This fact is similar to the amount of loan because interest rates on personal loans are always based on the credit rating. And just as with the amount of money you take the interest rate will depend on your credit score, the higher score the lower interest rate you get. There is no secret that lower interest rates are perfect because it means that you need to pay much lower cost for simply borrowing a loan.
Personal loans a fixed repayment period
With personal loans you always get a fixed set period of time during which you have to repay the loan. In Calgary personal loans periods are regularly stated in months, for example 12, 24, 36, 48, and even 60. The longer repayment period you choose or get the lower monthly loan repayment you will have, but at the same time it means that the interest rate you have to pay to the bank is higher. So at this point everything will depend on the money you will be able to pay back monthly. The interest rate you get may also be connected to the repayment period. For instance, banks usually give lower interest rates for shorter repayment periods and vice versa.