A personal loan is a credit that a person requests from a banking institution.
A personal loan is a type of credit granted by banks . It is a financial service that contemplates the delivery of money on loan to an individual by a banking or similar institution.
It should be noted that loan is a term that can be used to name what is lent. This means that something is given to a subject and then he or she must return it, under certain conditions. Personal , for its part, is an adjective that refers to what is linked to a person.
Characteristics of personal loans
Personal loans have the particularity that they do not require the person requesting them to provide real collateral (such as a mortgage , for example). This means that the lender (the financial institution) bases the loan on the payment commitment of the borrower (that is, the person requests the loan). Due to the high risk involved in this operation, it is common for personal loans to have a high interest rate .
Beyond this absence of real guarantees, the bank can request that the borrower have a collateral guarantee , which will provide greater support against the possibility of non-payment. It must also be taken into account that the bank can act against the debtor's assets in the event that the debtor does not pay.
Personal loans are usually used to purchase consumer goods.
Other properties
In addition to all of the above, we cannot ignore other important characteristics of this type of loans, such as the following:
- Fundamentally, they are usually requested to be able to carry out actions related to the purchase of services and consumer goods. We are referring to both the acquisition of a computer and paying for studies abroad or buying furniture to decorate the house, for example.
- Another of its main peculiarities is that personal loans, as a general rule, do not have a very high amount.
- To grant the loan, the banking entity previously studies the person requesting it. Hence, you are responsible for finding out what assets you own or what payment capacity you may have based on your payroll.
- Its processing is much faster than that of a mortgage loan because the individual who requests it does not have to compromise any of the assets they own, such as their home.
- Of course, as we have mentioned, these types of loans have a much higher interest than mortgage loans.
- Within the set of personal loans are, for example, the so-called consumer loans.
Request for a personal loan
It is important that anyone who wishes to apply for a personal loan first takes into account the offer that exists in the market. To do this, you must analyze aspects such as the interest rate, the repayment period, the amount of the monthly payment or the opening commission.
The operation that involves the delivery of a personal loan usually begins when the interested party approaches the bank to request a loan. The banking entity analyzes the request and the payment capacity of the borrower and grants him a certain amount, with the requirement that the client return the loan within a certain period and with the corresponding interest . Generally, the agreement is sealed with the signing of a document.