What is a personal loan?
Personal loans are shorter-term loans that consumers can receive from banks, credit unions, or private lenders, like online marketplace lenders and non-bank peer-to-peer lenders. The loan funds can be used for just about any purpose, such as paying off other debt, financing a home renovation, or paying for family needs, like a wedding or adoption.
Borrowers receive a single lump sum that’s repaid over a number of years. Most personal loan terms range from 24 months to 60 months, but some can go as high as 72 months. The typical personal loan is repaid in monthly installments, similar to a car loan or home mortgage.
Personal loans are typically unsecured, meaning they are not backed by collateral such as a car, house, or other assets.
If you need cash fast, these loans are a good choice because the approval and funding process is often faster than that of a home equity line of credit.
Which is the Best Bank to Apply for a Personal Loan During the COVID-19 Pandemic?
The COVID-19 pandemic has brought situations never heard before, like social distancing and staying indoors. The lockdown is still in force and has led to incidents like salary cuts and delays, loss of jobs as well as businesses. As the normal KYC process is stalled due to the lockdown, banks have stopped disbursing loans. But there are banks like HDFC that offer personal loans to individuals having salary or savings accounts with the private lender. So, if you hold such a relationship with HDFC Bank, you can apply there provided you need the loan.
What are the current personal loan interest rates?
Personal loan interest rates currently range from about 3 percent to 36 percent, depending on your credit score. As of Aug. 5, 2020, the average personal loan interest rate is 11.88 percent.
The better your credit score, the more likely you are to qualify for a personal loan with the lowest interest rate available. Compare personal loan offers to see what you are eligible for before applying for a personal loan.
APR & Loan Duration
The APR on a personal loan from our network of lenders and lending partners varies, with many providers offering rates from 4.79% to 35.99% and loan duration between 90 days and 72 months. The actual loan rate depends on the loan amount and term requested, as well as your credit score, usage, and history. If you are offered a loan, you will have the opportunity to review the final offer made by the lender or lending partner and accept their loan agreement.
If you borrow $4,000 on a 2-year repayment term, the monthly repayment will be $182.74. The total repayment will be $4,385.74.
Annual Percentage Rate
The Annual Percentage Rate is the rate at which your loan accrues interest. It is based upon the amount of your loan, cost of the loan, the term of the loan, repayment amounts, and timing of payments and payoff. By law, the lending partner and partner must show you the APR before you enter into the loan.
States have laws limiting the APR that the lending partner or partner can charge you. Rates will vary based on your credit, loan size, and whether collateral is provided, with the lowest rates available to customers with good credit on larger, secured loans. Minimum and maximum loan amounts and APR may vary according to state law and lending partner or partners. We recommend you read the lending partner’s and partner’s personal terms and conditions in full before proceeding with a personal loan.
Personal Loan Example