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Your Personal Loan – The Facts

There are many sources from where you can get personal loan. You can get personal loans from the internet, finance companies, bank, or from your credit card company against proper collateral security. It is relatively easy to get such loans from the internet sources. One form of personal loan is known as payday loan, which is the quickest of all loans, and easier to get. It is a short term loan and is available up to $500, secured by your next paycheck. You do not need a credit check to get payday loan. There is a fee that you would need to pay for taking out a payday loan, which is taken out from the loan amount given to you. Payday loans are paid directly into your bank account, and the amount that you receive is the actual loan given minus the fees. The interest rate for payday loans is very high and can go up to 780% in the range of 390 percent to 780 percent (APR).

At times you would need a much larger sum of money, perhaps to pay for a computer, furniture, tuition fees, or to meet your vacation expenses. In this case a credit check will mostly be done. Instead of applying for the loan with different lenders, and having a credit check done by each and every one of them, lowering your credit rating in the process, you should use a broker to arrange the loan for you. The broker would do the credit check once and pass the information to several possible lenders. You would need to provide a statement from your bank and your paycheck stub in order to prove your earnings in order to qualify for the personal loan. You will be charged a fee for loan sanctioned to you, which typically varies from 15% to 30% of the loan amount.

The other way that you can get a personal loan is by home equity line of credit. These types of loan, taken out by providing your home as a security, are mostly used towards debt consolidation, home re-modeling, and for other similar purposes. The interest that you pay for this type of loan is much lower than the payday loan. If you have created a second mortgage on your home to avail a personal loan, and if you decide to sell property before your loan gets paid off, your personal loan will need to be serviced first out of the sale proceeds. Therefore, if you are considering selling your house to make a down payment for the one you wish to buy, you will need to pay off your personal loan at first before you can use the money that you got from the sale.

When you consider on borrowing, be it against your paychecks or your home, it will be worth if you review your financial priorities at first. It is important that you spend the money that you get from personal loan wisely to meet the expenses for which the loan has been taken out.