A personal loan is a smaller loan than a mortgage and is generally used to finance a car or other vehicle, renovations to a home, consolidation of debt, to finance a vacation of one kind or another, and a great number of other things.
A personal loan is of a shorter term than a mortgage. Instead of being for ten, twenty, perhaps thirty years, a personal loan is usually for between one and five years.
A personal loan can be used to consolidate a number of other loans into one. This will allow you to make one payment instead of many. This type of loan is also called a debt consolidation loan.
When applying for a personal loan you need to be careful and to be fully informed. Make sure:
- You fully understand what you are doing
- The solution you choose will be of real benefit to you and not just a short term fix
- You have achieved control over your debts
- The personal loan will mean reduced repayments and not increased
- You are fully informed of the consequences of the steps you are taking
- There are no hidden costs
- You are better off as a result of the solution you have chosen