These are the types of interests in personal loans
Knowing from head to toe the operation of personal loans online is vital for people who wish to apply for them. This is the most important aspect of any financing and all online personal loans have them.
The interest rate on personal loans is a fact that clients take into account before choosing between one or the other. However, not many people know what they are. Therefore, knowing how each of them works is very important because it will allow us to take the best personal loan in the market.
Types of interest for personal loans
Interest rates for personal loans are usually defined according to two different interest rates. These are known as the TIN and the APR. The first is the Nominal Interest Rate is the interest, expressed as a percentage, agreed between the creditor and the borrower of a loan, and that the latter must add to the capital at the time of returning the loan.
The APR, which is the acronym for Annual Equivalent Rate, is another value that expresses more precisely the interest rate, since in this case the TIN and other expenses related to the loan are included and the client must know it in order to pay in The indicated term.
Because of this, although most financial institutions can advertise the TIN for information purposes in their loans, the APR is the reference value for expressing interest rates for personal loans.
There are also other types of personal loan interest. These can be fixed, variable or mixed. Here we will explain each of them.
Fixed interest rate
Here the monthly installment is fixed for the entire duration of the personal loan. The advantage of this modality is that it will be known from the beginning how much will be paid every month. The negative point is that at the time of contracting, the fixed interest is usually quite high and the repayment term is shorter.
Variable interest rate
This interest rate is reviewed annually or semi-annually and must be adjusted to market conditions, according to some benchmark chosen by the lender. It usually offers longer repayment terms, but there is a risk of having to pay a higher fee if interest rises.
Mixed interest rate
In some personal loans online the interest is fixed for an initial period of years and then it becomes a variable rate.
Regardless of the personal credit interest rate, you should know precisely what personal credit is.
We can define personal loans as that operation in which a creditor, who is usually a financial entity, lends a certain amount of money to a client, who must be a natural person, and who will have to return it accompanied by interest.
The main characteristic of personal loans is that the debtor responds with all his present and future assets, without needing additional guarantees or guarantees. In other types of loans, such as mortgages, in addition to the debtor’s personal responsibility, it is necessary to prove a mortgage guarantee (usually on the real estate on which the mortgage falls).
These, of course, have a personal credit interest rate that will determine how much you must pay for the personal credit over the duration of the loan.
Personal loans have the main advantage that not so many additional guarantees or guarantees are required, as it happens in mortgage loans. In this way, the debtor has greater accessibility to the granting of these credits.
Bank that give fast loans
Many people search the Internet for information about banks that give fast loans. The truth is that there are many and each has its own characteristics and ask for different requirements. Our experience tells us that asking for loans through banks is much more complicated than doing it online.
For example, people who have a bad credit history have it more complicated to obtain personal loans through the bank and therefore use online loans.