A personal loan is a type of loan that is opted by many consumers at one stage or the other. It is often used to cover various type of expenses and purchases. It can be to purchase a brand new car, a family getaway or to cover the expenses of a wedding. It is however mandatory that any person who is thinking of acquiring a personal loan be well informed and educated. It is important to take good decisions in order to avoid all the negative repercussions and consequences in future. There are various types of loans available in the present market and all these loans are designed specifically to meet various types of circumstances. It is thus important to understand how all these work.
A loan can be defined as a financial contract in which one particular party that is the lender agrees to give another party who is called a borrower a specific amount. This amount must obviously be paid back by the borrower on a monthly basis over a certain period of time. There can also be a lot of interest payments at an agreed rate and there can also be additional charges for proper administration of the loans. All the terms and conditions of a loan can vary from one lender to another lender.
However this must be specified in the contract that has been agreed upon. The borrower must mandatorily adhere to all the terms of repayment that are stated in the contract. This includes all the interest rates as well as the dates of repayment.
Loans can come in many shapes and sizes. However the two main types of loans are secured loans and unsecured loans. The main difference is that one secured loan will use an asset which is usually a home and this is used as security. On the other hand unsecured loan can be available to most of the people provided they have a very decent credit rating and are also employed on a regular basis.
Applying for the loans
When you successfully negotiate all the stages and reach the point of applying for your loan, you as a borrower must have an extremely clear idea of how much you actually require how much you can repay by considering your affordability rate. You can also use a tool called the loan calculator that is offered by all the major banks and this loan calculator can help you to work out all your monthly repayment strategy in an organized manner.
The cooling off period
You can avail a cooling off period that consists of 14 days. This starts from the date of loan agreement that is signed and continues until you receive the copy of the agreement. If you by any chance cancel the loan, you can send a notice of your withdrawal by writing. This notice can also be given verbally after which you can avail the 30 days that can be used to repay the capital and any type of interest accrued between the taking of the loan and also repayment of the loan.