Managing Finances with a Personal Loan

Credit: Miran

Credit: Miran

Most of us are familiar with loans, whether for school or business. Maybe less familiar is the concept of a personal loan, a loan taken by an individual to manage personal expenses. Events such as a wedding or vacation may require a lot of cash at once, which can then be paid off over time. Personal loans can be a tool to refinance other debt, whether to obtain a lower interest rate or to simplify the task of paying off credit cards individually. Loans can be used for career advancement or education. There are as many reasons to take out a personal loan as there are individuals. How you use the cash is up to you.

Personal loans are considered to be unsecured, meaning you don’t put up any collateral (such as a car) in order to get approved. While this can be an advantage, it also means that the interest rate is often higher than a secured loan. Just how high depends on your creditworthiness. The institution offering the loan will examine your credit report, current income and debt obligations and any other information.

Personal loans can be obtained from a variety of financial institutions like Quick Loans Express. Banks and credit unions are often the first choice, and they are the most reputable lenders. They are also subject to consumer protection legislation, which prohibits many of the abuses common among payday lenders. For those who can’t obtain a loan from a traditional institution, payday lenders offer very short term loans (a few weeks to a month) but at astronomically high interest rates, often with hidden fees attached.

If you are considering a personal loan, take care to research the institution and consider all the terms before taking the loan. It can mean the difference between better life prospects, or further financial sorrow.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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