Personal loans are a handy choice when you need money for a specific purpose. There are a lot of reasons why such a loan is useful to you: from the purchase of appliances and furniture to the coverage of unexpected expenses. Unlike a mortgage loan, this type of loan is easy to obtain, whether you apply for it from a bank or a non-bank financial institution (IFN). Although banks are considered a reference point when you need financial help, the perception of IFNs is beginning to change. By informing themselves and finding out the advantages and disadvantages, people stop believing that non-bank financial institutions are “spikes”.
The number of people applying for loans for personal needs has increased considerably in recent years, and the loans granted by the IFNs are attractive because they have a fixed rate, the eligibility conditions for a loan are minimal and often the physical presence is not required at a headquarters, the contract being concluded online. There are companies, such as lite lender, that facilitate the process of obtaining a credit online only with the newsletter, and customers can use the money shortly after they have received a positive response.
What you need to know before taking a personal needs loan
If you are thinking about making a personal needs loan, here are some things you should consider:
1. What is a personal needs loan?
The loans needed are a loan for a fixed amount, which you return in monthly installments, plus interest. Once you have fully paid off the loan, the account is closed, and if you need more money, you must apply for a new loan.
2. See also the offers of the IFNs
Banks are probably the first institutions that come to mind when you think about making a loan. However, there are also IFNs that give very advantageous loans, with a minimum of effort that you have to make. MFIs – non-banking financial institutions – are organizations that do not have the status of bank, but can offer advantageous conditions, sometimes with rates and fees lower than banks, for the same type of product.
In addition, NFIs are useful because they have an easier and faster way to apply for and approve online loans. It is important not to start with preconceptions when it comes to an IFN loan, but to be well informed and find out what the total amount you will pay in the end.
3. See how your credit is calculated
Make the decision according to your needs and only after a thorough analysis on the following aspects: DAE (Effective Annual Interest Rate), interest rate (fixed or variable), currency, benchmark, other costs or commissions, the repayment period.
4. Pay attention to interest
Interest and other taxes can make a major difference in the total paid for a loan. Interest typically varies between 5% and 36%, depending on the lender. Generally, the longer the period you borrowed, the more you pay. There are lenders, such as lite lender, which allow you to repay a loan in 3 installments and you can do a simulation of the monthly amount you have to repay using a personal needs credit calculator. Nor does it escape the fact that some lenders charge certain fees for processing the loan, which are fixed or may vary (eg: percentage of the amount borrowed). Also, don’t forget about the penalties that are added to you if you fail to pay each installment on time.
5. Don’t neglect your credit score
Your credit score has a big impact on the credit of personal needs. Given that no collateral is needed to get such a loan, the lender relies on your “reputation” – how good you are. Depending on the institution you apply to, you can expect interest rates to be high if your score is medium or low. Certainly, online credit only with the newsletter can be an excellent option when you need money urgently. However, there are many factors to consider before deciding on the type of credit that suits you. The most important thing is to feel comfortable with the rates and amounts you have to pay, so that you do not feel overwhelmed, stressed or fooled by the taxes and interest you actually have to pay.
What is a personal needs loan?
In short, it is a loan taken by a natural person from a banking or non-banking institution to meet a personal need. Usually, it is granted based on criteria such as income, employment history, repayment capacity, etc. Unlike home or car loans, loans for personal needs are not linked to certain goods or properties. In general, interest rates are higher for this type of loan than for apartments or cars, because the risk of the lending institution recovering its money is considered higher.
The personal needs loans, regardless of the institution with which the contract was made, can be used for any type of financial need, from renovations, wedding organizing, holidays, studies, gadgets, medical expenses or other emergencies. Often, the maximum limit of the amount borrowed depends on the income and varies according to the employment contract (full-time employee, employee, administrator in his own company, etc.).
If you have other loans, they can also influence the value of the new loan. Many institutions also have a minimum value for loans granted. Also, others charge a certain fee if you pay the loan more quickly. Before you decide, it is advisable to check the criteria, fees and interest rates of several financial institutions that grant loans.
How to Apply for a Personal Loan
For a loan you can apply alone or together with a person, who in general must be a member of the family – the spouse or parents. If you have a co-debtor, it means that your application will be eligible for a larger amount. But take into consideration the fact that your co-applicant must also have a good credit history; otherwise, the chances of a successful loan application are low.
The documents required for a loan differ from one financial institution to another. In the last years, the process has simplified quite a bit and now you can only take loans with the newsletter, from the comfort of your home. For some institutions, eligibility conditions may include a minimum age of 18, a valid card to collect income, a minimum monthly income that varies by institution, a valid email address and a functional phone number.
At lite lender we support responsible lending and encourage the application for a personal needs loan in 3 installments only at the moment in unforeseen situations or when you have found a super offer and you do not have the necessary money. Think long-term before taking a loan and analyze all the problem data.