A Quick Guide to Personal Loans

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The spoken and unspoken
rules of lending

Published in: Economy & Finance
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A Quick Guide to Personal Loans

  1. 1. A Quick Guide toPersonal Loans The spoken and unspoken rules of lending
  2. 2. For what Reason?• Most common reasons for a loan: – House – Car – Boat – Health bills – Debt payoff• For small loans, bank may not even ask
  3. 3. What Kinds of Loans? • Peer-to-peer loans – Friends or family • Home equity – With or without line of credit • Short term • Fast cash advance • No-credit loans
  4. 4. Secured vs. Unsecured• Secured personal • Unsecured personal loan loan – Require collateral – Do not require any promise assets of collateral – For those with lower – Lender usually needs a very credit score good credit score – Lower interest rate – Higher interest rate – Less risk to bank – Less risk to borrower
  5. 5. Frequency of Loans• Rate of personal loans being approved is increasing• Recent reasons – Economic instabilities – Doubled amount of bankruptcies therefrom – General overspending
  6. 6. Numbers • Average size of personal loan is $4,402 • Banks usually call between $1,000 and $10,000 personal • The smaller the loan, the smaller the interest rate
  7. 7. Loan Term• Banks can offer much longer lending plans• Average term length is three years – Compared to average length of seven years for business loans• Smaller payments vs. less interest
  8. 8. Employment Conditions• Loans for employed • Loans for unemployed – Higher approval rate – Approved less frequently than the unemployed – Granted almost half as – Can improve credit much score – More flexible options
  9. 9. Supply and Demand • Banks are supplying – Easy to market – Quick way to jump-start bank’s business • People are demanding – Easy to manage – Quick way to consolidate debts
  10. 10. Overall Benefits• More popular form of lending• Reliable option – When approved by bank• Will help boost your personal finances long-term – Increase overall economic activity

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