Throughout life we can find ourselves in situations where we need certain liquidity that we do not have. Although it is true that to acquire any object or product, it is most recommended to wait until you have the necessary cash, there are occasions when the need is immediate. For example, if we are hired for the first time outside our place of residence and we do not have a car to commute to the workplace every day, we will need to buy a car, but we still will not have saved enough money. In such situations, the solution is to request a personal loan from a bank.
If you are faced with a similar situation, but you are not clear about what a personal loan is or to what extent it is advisable to get into debt, read on.
What is a personal loan?
When we talk about personal loan, we are referring to a contract by which a financial institution, normally a bank, although not necessarily, delivers a certain amount of money to a person, whether physical or legal, which is obliged to return it in full in a certain period together with previously agreed interests.
We can find different types of personal loans offered by financial institutions, but although they may have small characteristics that differentiate them and are marketed under different names, in essence, they are the same.
How to choose between different personal loans?
When contracting one or the other loan, it is important to carry out a small comparative study and opt for the one that offers us the best conditions, lowest fee, and other terms where you get benefits.
To carry out this valuation, we must attend to the following indicators: interest rate, repayment term or term of the loan, amount of the monthly installment, opening and cancellation fees, as well as other expenses required or conditions imposed the entity, such as contracting an associated product, such as opening an account at your bank.
Although meticulous comparison can be tedious, it is important to spend time on this step as we can save large amounts of money in the long run. To make that task easier, it is better to get help online resources. At Kredity, you can easily compare different loan providers, their features, conditions, benefits, and many more aspects. Thus, you can easily narrow down your choice to one or two, so choosing among them become easier for you.
How a personal loan is different from a mortgage?
Both a personal credit and a mortgage are loans. The main difference between both types of loans lies in the guarantee of payment that we offer to the bank in exchange for advancing the money.
In the case of the mortgage, we are offering as a real guarantee the property that we acquire, that is, the mortgaged property itself, which will become the property of the bank in the event of default.
In the case of personal loans, there is no such mortgage guarantee, but this does not mean that we do not respond for the non-payment of the credit, but that we will respond with all our assets, present and future. That is, if we do not have assets at the time of default, the assets we have in the future will be subject to compliance with this obligation, until we satisfy the entire debt, including interest.
Precisely because these types of personal loans do not have a real guarantee (such as the mortgage), they tend to have higher interests and be granted for shorter periods. Also, much smaller amounts of money are granted through personal loans.
What fee is convenient for me?
Depending on our purchasing power, this should be the maximum fee we must pay. That is, depending on the income we have, our needs, and the previous debts that we have a pending payment, we will set the maximum quota that we can face without putting our economy at risk.
The figure recommended by experts is 20% of our salary. But this percentage does not refer to the payment of a personal loan, but to all the debts we face. This amount increases to 35% if we have a mortgage.
Once we have seen the characteristics of personal loans, the most important thing is to rely on common sense. First of all, always value the importance and the true need for the credit that we are going to ask for. And secondly, always take into account whether the figure is reasonable based on our income and our circumstances.