You may be hit, at some time or another, with an unexpected expense like a medical emergency, or a vehicle that suddenly needs repairs. Or you may find yourself really needing a vacation or new computer that’s just out of your price range. Whatever the circumstance, if you need cash to cover an expense, a personal loan may be right for you. Here are the basics of personal loans houston tx.
A personal loan is an agreement between a lender and a borrower. The borrower applies to receive funds, the lender evaluates the borrower’s ability to pay back over time. If the lender approves, they present the amount of money they’re willing to extend to the borrower, and for a lending fee (interest), duration of the loan (term.) Once both parties agree, the borrower pays equal monthly payments until the amount originally borrowed (principle) is paid back with interest.
Personal loans vs. payday loans
Personal loans are a much more conventional (and typically, less burdensome) method of borrowing than payday loans. Payday, or “title” loans require the borrower to provide collateral such as a car. They generally have higher rates of interest, and must be paid back in a shorter period than traditional personal loans. Due to the structure of the loan, it is easier to default on a payday loan than a personal loan. Personal loans are also subject to more regulations that protect the borrower
Requirements to apply
While you shouldn’t need collateral or a down payment to secure a personal loan, there are certain baseline requirements to qualify. A borrower will need to show proof of income and residence, be 18 years of age or older, have a valid ID or driver’s license, and have a social security number.
What to expect
After you have been approved and received your funds, you will be expected to make equal monthly payments on time for the term of the loan. If you do this, once the term is complete, your obligation is fulfilled.