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What does a personal loan mean?
A personal loan is a borrowed amount of money for about any purpose, including debt consolidation. For example, you can use a personal loan to:
- Consolidate debt
- Pay for home renovations
- Plan a dream wedding
Personal loans are offered by credit unions, banks, or online lenders. The borrowed money must be repaid, typically with interest. For personal loans, some lenders may charge fees. But, it depends on the lenders how much the agreed fee will be.
Personal loans can cover several personal expenses. It can be unsecured, secured, requires collateral for borrowing money, or without collateral needed. It varies greatly when speaking to the following:
- Interest rates
- Repayment terms
Comprehending a personal loan
A personal loan allows a person to borrow money to pay personal expenses and reimburse those funds over time. Personal loans are a kind of installment debt, allowing you to get a lump sum of funding. For instance, you can use a personal loan for covering:
- Medical bills
- Debt consolidation
- Moving expenses.
- Funeral costs
- Home repairs or renovations
- Wedding expenses
- Unexpected expenses
- Vacation costs
The loans are different from the other installment loans, such as:
- Student loans
- Car loans
- Mortgage loans
Personal loan calculator
A personal loan calculator gives concise visuals, helping to determine these two aspects:
- What monthly payments
- Total costs look like
Since most personal loans have different fees and insurances, the end cost can be higher than promoted. A personal calculator estimates the monthly payment when inputting the loan amount, repayment term, and estimated interest rate. By changing one or more numbers, you will be seeing how different loan offers impacted the monthly payment and the interest to pay.
A loan with a longer term has a lower monthly payment, you will take more time to repay. But, you can wind up paying more interest, it accrues over a long period. Several lenders charge a higher interest rate for a longer-term. Take note, compare lender and loan offers. To do this, use a personal loan calculator.
You may find whether the loans you are considering will charge an origination fee. An origination fee is a common fee on a personal loan, which is generally a percentage of the amount of the loan. If you are under a financial burden, you may apply for a personal loan. But, before getting approved, check how much you are going to pay for the loan using a personal loan calculator.