Online Personal Loan at GreenPlaceLoans
Life happens, so sometimes our available funds don’t match up with our immediate needs. Sometimes, we will have the money later for the thing we need to do now.
This is called a cash flow issue. Loans can be an excellent way to iron out these differences between when you expect to have the money and when you need the money. They can be a means to try to get life to run relatively smoothly in that regard.
There are different loan products for different needs, such as credit cards, mortgages and personal loans. Different loan types are structured differently and have different intended purposes.
Details will vary from one lender to another and from one borrower to another. No two loans will be exactly the same.
You should try to understand what type of loan is most appropriate for a particular situation before applying. A good way to start is to simply understand how different loans are structured.
Let’s start by talking about personal loans. What are they and how do they differ from other loan types?
What is a personal loan?
In most cases, a personal loan is a loan between $1000 and $50,000 that is issued without collateral for a term of between one and five years. It is sometimes called a signature loan or unsecured loan.
This is different from a car loan or mortgage where the car or house serves as collateral. In other words, the bank can repossess the car or house and sell them to help cover the loan if the lender defaults.
Because a personal loan is based heavily on your word that you will pay it back, your credit score has a big impact on whether you qualify at all. It also has a big impact on both the amount you can borrow and the terms of the loan.
How is a personal loan different from a payday loan?
While a payday loan is also unsecured debt, it is usually for an amount between $100 and $1500. Payday loans are very short term loans and are usually due within 30 days.
They are also called cash advance loans or check advance loans. They are usually scheduled to be paid in full on the date of your next reliable paycheck and typically involve writing a post-dated check for the amount that the lender can cash if you don’t show up with the amount.
In many cases, payday loans are issued at small establishments in person. Once you establish a relationship to a particular payday loan lender, you can usually go back to the same place again and again.
It’s actually a common practice to ask if you want to “reborrow” at the time that you return to pay the loan back. This is one of the reasons the loans have a bad reputation.
The other reason they have a bad reputation is that the annual percentage rate for the loans is extremely high. Many people who take payday loans don’t really understand that because it is paid off in a short period of time and the interest is often a flat fee.
However, over the course of a year, it’s actually a very large amount of interest for the amount of money borrowed. This is part of why payday loans are deemed to be predatory loans by many people.
How is a personal loan different from a credit card?
Personal loans and credit cards are both unsecured debt, but many credit cards charge higher rates, so they cost you more in interest. Credit cards also do not have a fixed payment, so it can be hard to budget for them if the payment changes.
But the biggest difference is that a credit card is a revolving account. In other words, you can add more to the debt by pulling out your credit card and paying for something else with it.
This convenience can come in very handy. Using a credit card amounts to taking advantage of a pre-approved loan any time you wish, day or night.
But it can also be an expensive trap. Because of the high-interest rates, many credit cards would take decades to pay off if you made no new charges and only made the minimum payment.
In practice, many people continue to make new charges and never actually pay off the credit card. This means they continue to pay interest in perpetuity.
In contrast, a personal loan has a fixed schedule. If you make the payments, the balance will eventually reach zero.
How is a personal loan different from a secured loan?
The primary difference is that a secured loan involves collateral. In other words, the loan is attached to property that can be taken by the lender and sold in the case of a default on payments.
However, secured loans are also typically for more money and for longer terms than a personal loan. Another difference is that secured loans are less risky for the lender, so they typically charge lower interest rates.
The two most common types of secured consumer loans are mortgages and car loans. Mortgages are often for 20 or 30 years. Car loans are often for five years or longer.
Personal loans usually involve less money, shorter time frames and higher interest than secured loans. They also can generally be used as you see fit.
In contrast, secured loans are usually for a specific purpose. A mortgage is not only secured by the house, but it is also used to purchase that same house. The same goes for car loans.
In most cases, a secured loan and a personal loan both involve a fixed interest rate and a fixed length of the term. In such cases, you will know in advance how much you need to pay every month and when the loan will be paid in full.
Of course, there are exceptions. Car loans almost always involve a fixed interest rate, but mortgages can have variable interest rates.
Advantages of getting a personal loan
Personal loans typically have better interest rates than credit cards or payday loans, while being issued more quickly than secured loans, such as mortgages. Secured loans tend to be for large sums of money over long periods of time. Unsurprisingly, they tend to take a lot of paperwork and are usually not issued quickly.
Personal loans are generally safer than credit cards and the interest rate is usually a fixed rate. This means the payment amount won’t randomly go up unexpectedly. You know in advance how much your payment will be.
You also have the latitude to do what you want to do with a personal loan. In contrast, secured loans are usually constrained in what you can do with the money. They are for a specific purpose.
Common reasons to get a personal loan
- Debt consolidation
- Education expenses (college tuition, books)
- Pay off credit cards
- Moving expenses
- Home improvement or major purchase
Because personal loans are based largely on your word that you will pay them back, they require some due diligence on your part to make sure you use the money in a way that makes sense for you. No, you don’t have to answer to anyone for how you use the money, which is a good thing. But with freedom comes responsibility.
Debt consolidation can be a great use of a personal loan. It can simplify your monthly bill paying process and also reduce the amount of interest you are paying on credit cards or other high-interest loan products.
Ideally, unsecured loans should not be used as a crisis-management tool. This is typically the start of financial trouble down the line.
Please educate yourself before taking on an unsecured personal loan. Financial literacy is the single best way to make sure that a loan is a good debt, not bad debt.
You really cannot count on simple rubrics like “X type of debt is good debt and Y type of debt is bad debt.” Good debt is debt that saves or earns you more than it costs in interest.
Good debt is an investment in a better future. That can come in many different forms.
Bad debt is debt that bleeds you financially and worsens your financial health and quality of life in the long run. This can also come in many different forms.
Read the fine print
Some personal loans charge an origination fee to cover their costs of processing the loan. This is an amount subtracted from the total loan. You need to make sure you borrow enough to cover the fee and still have enough to cover the intended objective for the loan.
Other loans will charge a prepayment penalty, making it painful to pay them off early. If you are the type
Make sure you know what the details of the loan are before you sign for it. Many “hidden fees” are right there in plain sight in the written loan agreement.
Some best practices:
- If you don’t understand a word or phrase in the contract, look it up or ask for an explanation.
- If you aren’t sure about the decision, “sleep on it.”
- Have a trusted, financially literate friend help you read through it.
“Sleeping on it” is a great practice, but shouldn’t be thought of as solely limited to actually sleeping. If you really aren’t sure, you should do some research, crunch some numbers and/or talk to someone you trust. A long term financial commitment is a serious commitment and should be treated as such.
The loan process
If you get an online personal loan, you will need to provide many of the same documents that your bank or credit union would expect if you applied in person. This often includes both a copy of your ID and recent bank statements or other verification of your income.
Loans are often direct deposited to your bank account within 24 hours of approval, making them almost like being handed cash. This allows you to disperse the funds as you see fit using your usual spending methods, such as your debit card or getting cash from the ATM.
The convenience of online personal loans
Personal loans are already one of the more flexible and convenient loan products. Applying online just adds to the convenience.
An online loan application through a loan portal can allow you to compare lenders. It can allow you to be simultaneously considered for multiple different products from multiple different lenders at the same time.
An online loan can be applied for any time of the day or night. It doesn’t have to be done during regular business hours. Whatever your schedule, it is an application process that fits around your needs.
It can also be applied for from almost anywhere. Whether you are in a downtown apartment or a rural farmhouse, you have equal access to the application process.
Start your application
Does a personal loan sound like the right product for your current financial situation? If so, you can start your application today in the privacy of your own home.
You can start it right here, right now. Just click the “GET STARTED” button to begin.