What is a Personal Loan?

When we talk about personal loans we refer to a specific type of banking product that allows you to have an average amount of money, halfway between microcredits and mortgages.

The amount of money that can be obtained with these loans usually ranges from $3,000 to close to $100,000, and they are used to acquire goods and services whose value is within these margins, such as a vehicle, a home renovation, the purchase of furniture and appliances, a good trip or student loans.

Depending on your needs, the best personal loan for you will be the one that best suits your needs and personal situation, depending on the term, amount, fees and interest.

Through a personal loan, the bank or financial institution that grants it, gives you from the beginning the amount of money previously agreed. This amount can be deposited in your checking account so that you can use it for whatever you want or it can go directly to pay for the product or service you want to finance.

This is the main difference with credits, in which the amount granted is not deposited at once, but is obtained little by little as you need it.

For their repayment, personal loans have a period of time, specified before the signing of the contract, during which the amount borrowed plus the corresponding interest must be repaid. This repayment is made in installments, which are usually monthly.

As a general rule, the longer the term, the lower the amount of the installment, but the higher the total amount of interest to be paid. The best option is to shorten the repayment period as much as possible, as long as the resulting installment is comfortable to pay.

Depending on your needs, what you want to do with the money, how long you need to pay it back and your financial situation, the best personal loan for you may be one or the other.

Ideally, you should compare the largest possible number of financing products available on the market.

In these cases, the application and granting process can take only a few hours, in 24 hours you can have the money in your checking account. In addition, the requirements are much less demanding than in bank loans. The amount of money usually does not exceed $15,000.

If you are looking for a larger amount of money and/or you are not in a hurry to obtain the capital, it is best to resort to personal bank loans, which offer much more attractive interest rates and longer terms.

In these cases the amount to be obtained can exceed $60,000 and the terms can be up to 10 years. However, to access this type of financing, it is necessary to have a minimum of demonstrable solvency, since banks are usually more demanding when it comes to lending money than financial institutions that offer quick loans.

In order to access a personal loan, the financial institution that grants it will ask you to meet a series of requirements for your application to be approved.

It is important for the lender to make sure that you will be able to pay back the money in order to assume the lowest possible risk.

The more creditworthy you can demonstrate that you are, the easier it will be to obtain financing and the better terms you will be able to obtain.

Although each bank may ask for its own conditions, the most common requirements that credit institutions usually ask for in order to accept the granting of a personal loan are the following:

To reside legally in our country. Whether you are American by birth, nationalized or foreigner with legal residence in the U.S., it is essential to have established your main residence in our country if you want a financial entity to lend you money here.

You must be over 18 years old. By law it is not possible to grant financing to any minor, so as a minimum, you will have to be over 18 years old to be able to receive a loan. Some entities even raise this minimum age to over 20 years old.

Have a good financial history.

Have a regular income. Depending on the credit institution with which you consult, you will be able to accredit one or other sources of income, but the most usual thing is that having a salary or receiving a pension you will not have problems to access a personal loan. Some financial institutions will also accept other sources, such as unemployment benefits, rents from rented properties or income from economic activity as a self-employed person.

What expenses and commissions can personal loans have?

The contracting of a personal loan, in addition to the interests that are applied, which are included in the amount of each instalment, can imply the payment of other expenses and commissions, which will depend on the financial organization that grants it. Fortunately, nowadays it is possible to find many banks that grant loans without commissions.