What Is A Personal Loan?
A personal loan is an advance of funds granted to a consumer which can be used for a variety of purposes. Commonly personal loans are used for family reasons such as vacations, household expenses such as extensions and household items like computers, fridges and televisions. It is also becoming increasingly common for consumers to take out a personal loan to finance weddings as the cost of such occasions have increased sharply in recent times.
A personal loan can be either unsecured or secured – secured loans , as the name suggests are generally secured by the asset that they are used to purchase or an asset the consumer already owns such as a motor vehicle. Other ways of securing a personal loan, particularly larger loans, is to use the equity in the consumer’s property, or to use a co borrower as a guarantor on the loan. Unsecured loans don’t require collateral to be provided by the consumer in order for the funds to be advanced by the lender. They can be approved if the lender is confident in the applicant’s ability to repay the loan. To gain that confidence the lender will generally conduct a credit check and follow the necessary loan assessment processes to ensure that the loan can be comfortably serviced by the borrower.
A personal loan is generally required when a consumer doesn’t have sufficient savings or access to the necessary funds they need in order to purchase a particular item or spend money on a service they require. It differs from using a credit card in that there are usually fixed installments over a fixed loan term. Personal loan terms can range from a few months up to five years. Many borrowers enjoy the structure of having a fixed term and knowing that their debt will be paid off in a set period of time, as opposed to requiring the discipline to make regular payments on their credit card to ensure the debt is paid off quickly and doesn’t remain at a maximum limit incurring additional interest.
Small short term loans are becoming increasing popular in today’s society with some consumers enjoying their convenience, fast approvals and being able to have the loan paid off quickly. The short term personal loans can generally be approved on the same day an application takes place and the debt is usually paid off within twelve months.
Don’t hesitate to speak to our loan experts should you require further information
Direct Finance Loans can provide you with further information on short term loans and if you require funds quickly and like the idea of having the debt paid off in a short period of time, please call us on 1300 800 260 to speak with our experienced team.