Frequently Asked Questions Regarding Personal Loans

Coronavirus outbreak has taken place and has impacted the health of many individuals. This pandemic has made millions of people lose their jobs and they are unable to meet their basic necessities such as food, house bills and medical expenses . If you are in need of funds what is better than applying for a personal loan? It will help you get through hard times as they are a blessing in disguise at the time of need.

Now you might be wondering what a personal loan is and how it differs from a traditional loan . There are millions of questions that come to mind while applying for loans.  Let us delve deeper into the most frequently asked questions that people have regarding personal loans.

What is a personal loan? 

  • A loan that can help you at the time of need is a personal loan.  There is no need to provide anything as security, such as a home, boat or car.  They are available from banks, credit unions or online lenders. The mode of repayment is very simple; you can give it back in easy monthly installments with fixed interest rates.  You can apply for unsecured personal loans  with low repayment terms and fixed interest rates if someone has a good credit score.

Where can you use personal loans?

  • Personal loans are there to help us in various ways with debt consolidation, home improvement, auto expenses, medical expenses, debt pay off, and anything that life may throw at you.  No one is going to ask you the purpose of the loan. One of the most common reasons for applying for an unsecured loan is to settle existing credit card debt that is becoming a concern for you.  The credit card will severely impact your credit report so make sure you pay your debts on time by applying for a loan under the TFC funding process.  You can save your money on a personal loan by paying off the debt sooner.

How do I qualify for a personal loan?

  • There is no collateral involved in unsecured personal loans. The loan from the lenders is based on your credit score. Make sure that your credit report is good and you repay your existing debts on time.  Lenders accept a minimum credit score that lies between 600 and 700+. The higher the credit score, the lower the interest rate a person is going to receive.

Will getting pre-qualified for a personal loan impact my credit score?

  • It would be best if you compare the options given by personal loan providers before  finalizing where to accept your personal loan. Most lenders perform a “soft “inquiry before showing pre-qualified offers.  Compare the interest rates offered by each lender as it won’t affect your credit score.

    What is a personal loan with collateral?

    • Certain lenders ask you to put your assets with them as a security against the loan.  All this happens when your credit history or income doesn’t meet the eligibility criteria laid by them. By providing collateral, you might get a loan with a high amount or low-interest rate depending on your situation.  Some people recommend unsecured personal loans from lenders if you don’t want to give anything to secure the loan.

    How much can I borrow and for how long?

    • All this depends on the lender and your financial situation. There are different categories of personal loans and you can repay them between 24 to 60 months. The higher the credit score, the more eligible you are for a personal loan.

    Which documents are needed for personal loans?

    • The main reason why the lenders ask for documents is that it helps them verify your identity and income. You will probably be asked to submit documents such as:
    1. Proof of identification.
    2. Bank statements.

    However, in unsecured loans there are no funding document requirements so anyone can get a loan based on their credit history.  Don’t sign any paperwork until you have gone through the terms and conditions of the loan. 

    Does it cost anything before applying for a personal loan?

    • Some lenders make a charge in the form of processing fees before applying for a loan.  The fee is generally deducted from the funds you receive. Most lenders don’t charge anything before processing the loan.  Ask the lenders well in advance before associating with them in the long run. The application fees they charge are non-refundable.

    If I have one loan, can I get another one?

    • Several factors can help you get a subsequent loan. Lenders will go through your credit score; an increase or decrease in income makes you eligible for the loan. The current loan is taken into account before providing you with another loan. If you are making payments on time, there is more chance of getting the loan. Your credit report might have improved and your rate will be lower on a new loan.

    Can I pay back my loan without penalties?

    • If you are applying for a personal loan, you choose the repayment period, which is usually in months. You can pay off your loan early. It is important to ask your lender whether the prepayment penalty will be imposed or not.

    Don’t sign the documentation part just because you need money to pay immediate expenses. Go through the funding document requirements before applying for a loan with any lender. Getting loans isn’t difficult; repayment is a hassle for many. Make sure that the repayments are made on a timely basis. It would be best to apply for an unsecured or personal loan under tfc funding process which follows a simple and easy process of providing loans at a time of need.  Come out of your financial troubles in no time and lead a peaceful and debt-free life in the long run.

    Also Read: Which is the Better Option – Student Loan or Personal Loan for Higher Studies?

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