What Is It?
A personal loan is a loan taken out for a personal reason such as big ticket household items including an overseas holiday, a car, furniture, elective surgery, or a wedding. Personal loans are also commonly used for consolidating your debts into one parcel of money to be paid off.
What Are The Different Types?
There are two main types of personal loans:
Secured: The loan is secured against an asset that you own, and if you do not repay the loan, they can sell this asset to repay the loan. As such, interest rates are lower.
Unsecured: The bank is relying solely on your income flow to repay the loan. Consequently, interest rates are higher to compensate in the case that the loan cannot be repaid.
What Is The Timeframe For Approval?
Part of the appeal of a personal loan is that they can be approved by financial institutions very quickly. Most financial institutions can approve or deny a personal loan in 1 – 3 banking days, and many lenders can even approve a personal loan immediately.
What Are The Features?
Loan term is usually between 1 - 7 years.
There are no exit fees.
Your interest rate depends on things like your credit score, income, expenses, and savings.
Maximum amount that can be borrowed is $50,000 depending on the lender.