Don J has decided to move his growing family from the two-bedroom apartment they’ve occupied for the last couple of years into a three-bedroom home. However, he’s not yet prepared to purchase a home outright so he begins looking into the “rent-to-buy” situation. Don then decides that in order for this plan to work, he could use extra cash to supplement the family income while in the initial period.

Over the years, Susan M has acquired a significant amount of debt for various purchases (home renovations, new car, furthering her education) and now she makes numerous separate payments each month. It occurs to her that if she could consolidate these payments into one, it would be considerably easier for her to manage her finances.

Fred G’s wife recently underwent emergency surgery for a serious medical condition. Fortunately the surgery went well but Fred now has to figure out how they’re going to pay the enormous medical bill that’s now part of their current expenses.

Above are three scenarios in which consideration of a personal loan could be the appropriate thing to do. Currently, loans of all types exist which could be the answer to many dilemmas, as long as the borrower keeps in mind that provisions must be made to repay these loans. Once this fact is fully understood, Loan Calculator Australia can show how a personal loan could be the answer to acquiring the financial freedom and flexibility to accomplish one’s goals or resolve one’s problems.

For all personal loans, there are standard terms that are decided upon by the lender and agreed to by the borrower regarding the loan chosen:

Secured or Unsecured Loan

A secured personal loan attaches a particular asset of the borrower’s as collateral that will be claimed by the lender in the event of loan default. A secured loan is cheaper than an unsecured loan because the lender has more of a guarantee of receiving something for the loan in the event it’s not repaid. With an unsecured loan, the lender is left with nothing if the customer does not repay; therefore, the lender charges higher fees and interest rates for this type of loan.

Fixed or Variable Rate Loans

Variable, or adjustable, rate loans are loans with interest rates that fluctuate periodically according to overall financial marketing factors, resulting in varying payments during the loan period for the customer. When marketing factors dictate lower interest rates, lower payments for the borrower will be the result. Conversely, a negative impact could result when the interest rates begin to climb, increasing the payments due. Another advantage of a variable rate loan is early repayment is allowed without prepayment penalties.

A fixed rate loan locks in a designated payment amount and this amount paid by the customer remains the same for the life of the loan no matter what changes occur with the overall interest rate. This allows for easier budget planning, but it restricts the customer from paying off the loan early without being subject to prepayment penalties.

Pre-Approved Loans

The lender does its credit checks and income verifications prior to offering the loan which helps them to decide whether to pre-approve a loan for certain customers. While receiving a pre-approved loan offer is an indication that the lender is considering the borrower’s eligibility for a loan, it doesn’t guarantee that the loan will be approved. The lender will do a thorough check on the borrower’s credit history before authorizing a loan.

Debt Consolidation Loans
Debt consolidation loans can simplify life by granting one loan to pay off multiple loans, leaving a person with a single loan to repay.

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