Do Banks Give Personal Loans?
Most banks offer many different loan services, including personal loans. Personal loans can range in amounts from less than $1,000 up to any amount the bank allows, commonly $10,000. These loans can be used for anything, but are generally used to pay bills or as a down payment on a larger purchase. Personal loans may or may not require collateral. The smaller the loan, the better chance you have of not having to put up collateral.
Shop around for personal loans at different banks. Banks do charge processing fees and an annual percentage rate in order to cover their cost on the loan and to make money from it. Check all fees at each bank. A borrower may come across a situation where the processing fee is higher at one bank, but the APR is lower. If the APR saves you more over time, it might be worth paying a higher processing fee.
Before signing a personal loan, always read the terms of the loan. The borrower should know the term of the loan, APR, fees and whether there is a prepayment penalty. While a borrower does not intend on making any late payments, this sometimes happens, so it’s a good idea to check what the late payment fee would be. A prepayment penalty is a fee that is charged if the borrower pays off the personal loan before a specified date. If the borrower wants to pay off the loan early, he should compare the amount of interest he would have paid over the full term of the loan and the amount of the prepayment penalty. If the penalty is higher than the interest, pay the loan as agreed until the prepayment date, then pay the loan off in full. Depending on your credit score, some banks will still offer a personal loan with bad credit if they understand the circumstances.
While secured personal loans may be more difficult to qualify for, if you can qualify for a secured loan at a “brand name” bank, you should opt for that rather than a personal loan at a non bank or a payday loan institution. Payday loans and non-banks (such as some internet banks) may offer personal loans that are easier to get, but the borrower may end up paying exorbitant interest rates and other fees. Also, if the lender sells the loan to another company or investor, the monthly payment could change due to changes in fees and the APR.
Read more about Personal Loans.