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Answers to the most commonly asked questions about personal loans.
The video covers everything from the different basic personal loan types, how they work, how much you can borrow, how to qualify for a personal loan, how to choose the right loan type, and the responsibility that comes with a loan of any kind and any size.
Presented by Vlad Sherbatov, President and Co-Founder of Smarter Loans.
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Hi everybody this is Vlad here from Smarter Loans and today I’m going to talk about personal loans, what they are, how they work, how to qualify for a loan and where to get one. Don’t forget to subscribe to the Smarter Loans YouTube channel for more videos that will help you make smarter financial decisions.
A personal loan means that you are borrowing a certain amount of money that needs to be repaid at set intervals, for example weekly or monthly. You also have a certain amount of time to pay back the entire loan amount. This can be several months or it could be several years. In exchange for borrowing the money you have to pay an interest rate or a fee and repay it on top of the total loan amount that you have borrowed.
Some loan types come as lump sums. For example an instalment loan can get you a few thousand dollars as a lump sum. Other loan types offer you access to credit when you need it such as a line of credit or a credit card. The main benefit of these types of financing options is that you don’t have to use the entire amount right away and if you just take out a small portion and use it, you only have to pay interest on that small portion.
A personal loan of any kind and any amount is a responsibility that must be taken seriously. Make sure that you carefully understand the terms and the cost of your loan before you take one out and most importantly ensure that your monthly income and your budget will allow you to comfortably repay this loan on schedule.
Personal loans can be classified as secured and unsecured loans. Secured loans means that you’re going to be using your personal assets as collateral on the loan. These assets can be your home or a vehicle that you own. The benefit of doing that is that it usually gives you access to more money, lower interest rates and it’s typically easier to qualify for a secured personal loan because you’re using your personal assets as collateral. The downside here is that using personal assets as collateral means that you are actually risking these personal assets if you’re not able to repay the loan on schedule.
Unsecured loans means that there is no collateral attached to the loan. For that reason they’re usually slightly smaller in terms of the amount of money you can borrow, the interest rates may be higher and it’s more difficult to qualify for an unsecured personal loan. The benefit of course is that they don’t come with any risk of losing your personal assets like your home or your vehicle if you fail to repay it on time.
There are many different types of personal loans available throughout Canada and the United States. Some of the most common ones are an instalment cash loan, a credit card or a line of credit, auto financing if you’re purchasing a vehicle or a mortgage if you’re buying a house, home equity loan also called as a second mortgage are also very common. It is important to understand that there are many variation of loan types and all of them work differently and different loan types are more suitable for different people and different lifestyles and I can’t cover all of them in this particular video but I encourage you, if you want to learn more about different types of loans and how they work please visit www.smarter.loans/personal-loans.
Different loan types come with different ranges of minimum and maximum borrow amount. For example a typical instalment loan can be between $2,000 and $10,000, a home equity loan can be larger $50,000 or $60,000 and can be used for things like a home improvement project. Mortgages go up to several hundred thousand or even several million dollars. Different people will also qualify for different loan amounts. For example if you make more money than somebody else you can probably take on more debt and you’ll be eligible for larger loan amounts from different lenders. Finally, different lenders will also set their own restrictions on the minimum and maximum borrow amounts that they will offer to any particular person.
To qualify for personal loan in Canada or the United States there are several key factors that most lenders will look at. They are your monthly income and how much money you make, your credit score, your past financial history and how you handle debt in the past, what type of loan you’re applying for and whether or not you have any personal assets that can be used as collateral. In addition to that it’s important to understand that different lenders may have different restrictions and some lenders may be more strict and others can be a little bit more relaxed on who they choose to approve for different types of loans.
Personal loans are offered by a variety of financial institutions from the big banks to credit unions and to many online FinTech lenders. It’s important to understand that different lenders will have different loan types that they offer and they will have different qualification requirements to be eligible for those loans. For that reason it is important to carefully compare your options and understand which lender and which loan type is most suitable for your particular situation. To help you do this visit smarter.loans. On this website you’ll be able to find the best loan providers that are available, you’ll be able to see the different types of loans that they offer, compare your options, understand what it will take to qualify for a loan and when you’re ready to make the decision you can apply from the comfort of your own home entirely online. If approved you can get a personal loan in your bank account in as little as 24 hours.
I hope that you’ve enjoyed watching this video and learned a little bit more about personal loans and how they work if you have any questions or wish to learn more about different types of loan products, how they work and where to get them, I encourage you to visit smarter.loans. Thank you very much for your time and for watching this and I hope you have a wonderful day.
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